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7/30/2019 Strategic Marketing Amul
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Strategic Marketing:
GCMMF Case
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Objectives
To analyze the feasibility ofdiversification of GCMMF from its coredairy business into
Agro Processing
Edible Oils
To suggest strategies (Corporate, SBU,Product levels) for growth of GCMMF
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Problems
Milk Supply Constraints
Competition from private players
Government policies (Co-operative VSCorporation)
How to remain both Customer and Supplier
Centric?
Opportunities to diversify in Agro processing andEdible Oils
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Agenda - Strategy Formulation
Corporate Strategy
(GCMMF)
SBU 1 (Dairy)
Bread Spread
Milk Powder
Fresh Milk
Cheese
Cooking Products
Milk Drinks
Desserts
SBU 2 (ProcessedFoods)
Fruits & Vegetables
SBU 3 (Edible Oil)
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PROPOSED CORPORATE
STRATEGY
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Proposed Vision and Mission
Vision
GCMMF shall be a partner in progress for the
Indian Dairy Sector and a provider of quality lowcost nutrition products to the World populace
Mission
To judiciously enhance milk procurementcapabilities and become the market leader atevery stage of value added milk products
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SBU STRATEGIES
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Star
Butter
Cheese Milk Powder
Yoghurt
Question Mark
Edible Oil
Ice Cream Sweets
Chocolates
Fruits &vegetables
Cash Cow
Liquid Milk
Ghee Baby Food
Dog
Nutramul
BCG
Matrix
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Growth Strategies
GCMMF (Corporate)
Dairy
(AMUL
SBU 1)
Enhance Procurement
Increase SupplierBase
Increase Procurementfrom existing base
Increase contributionfrom value added
products
Exclusive FranchiseRetailing
Export Orientation
Edible Oil
(DHARA - SBU 2)
Transfer Operations toNDDB
Agro Food Processing
(SAFAL
SBU 3)
Transfer Operations toNDDB
A dairy co-operativemarketing company
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ENHANCE PROCUREMENTCAPABILITIES
SBU DAIRY PRODUCE
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Challenges
Milk market saturated from supply side
6 % milk production growth rate; 8 to 10 % demand growth rate
Low per capita consumption of milk (225 mg)
Low milk yielding cattle
Low procurement penetration (1.7% of total milk produce inspite ofhaving a base of 22%)
Challenges to maintain supplier loyalty
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HOW TO CAPTURE MORE MARKET?BECOME NO 1 FROM NO 2 ?
ICE CREAMS
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Market Share
HLL
50%
Amul35%
Vadilal9%
Others6%
Vadilal strong in west
HLL traditionally the leader in organized sector with Kwality Walls
Amul making rapid inroads
Organized sector
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Indian Ice Cream Market
Total Size: 10 billion Rs
Organized sector: 3.5 billion Rs (30-35%)
Major Players: HLL (Kwality, Walls), Amul, Vadilal
West - 40% ice creams consumed
North 30%
South 20%
Western Region most important
Expected to grow continuously for few years due to lowerbase
Per capita Ice cream consumption: 0.12 Liters (USA: 23.3Liters)````
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Challenges Established players entrenched
Impulse product, so visibility means purchase
Difficult to reach consumer
Costly distribution infrastructure
Opportunities
Huge opportunity to tap Rs. 10 bn unorganized market Since Amul ice creams are low priced, ensure greaterconsumer base if availability is ensured.
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Two pronged
Market Penetration
New Products
Attack the market leader using a combination of price and distribution, aim tobecome the market leader
Ice Cream industry has wide open gaps, recognize them and create multiple nicheproducts to capture the market
In accordance with the vision of Mr. Kurien, capture the premium segment of ice
creams before other players (Indian/MNC) move in
Strengthen the distribution and cold chain specific to ice cream, especially in nonmetros
Strategy - Ice Cream
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Exclusive retail outlets in Metros Amul Parlors
Mobile vendors to increase penetration and availability around residential areasand schools
Use its existing good connections with the super markets to get more visibility atPOS
Strategy - Ice Cream
Pro
Increased availability
increased purchase
Attractive market worth
investing
Con
Increased cost of distribution,
NPD
High real estate cost of parlor in
up-market areas
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Exclusive AMUL retail outlets
A retailer cannot stock the entire productrange that GCMMF has to offer
An exclusive parlor for ice-creams and allied
milk products
Based on response extend the full productline to the franchise
To be opened in metros as well as developednon metros exclusive franchise model
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VALUE ADDED MILK
PRODUCTS
HOW TO GET HIGHER SWEET PROFITS
FROM MILK?
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Challenge
Milk Supply < Milk Demand
Local Mithai sellers offer better prices to dairyfarmers,(due to better margins in mithai) further reducing
our procured volume.
R&D to increase shelf life of milk sweets
Change consumer attitude towards packaged sweets asopposed to Fresh from the neighborhood mithai shop.This will take time
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Opportunity
Liquid milk
Market Size: Rs. 1,67,000 Cr
Stagnating segment of the Indian Dairy Industry
Operating Profit Margin: 36%
Market Share:
Mithai
Market Size: Rs. 50,000 Cr
Fastest growing segment of Indian Dairy Industry Profit Margin: 94% (Highest in the dairy industry
Acceptability of mithai of 1 region by the other
Hence Amul may think of entering the traditional Indian Sweet marketwith Gulab Jamun, Rasgulla, Barfee, Kheer, Mishti Doi, Peda,
Kalakand, Chenna sweets etc.
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Strategy
Contract Manufacturing of Mithai
Sold under the Amul brand name
Selling through existing retail outlets by
tying it with other Amul products
Leverage supplier skills to manufacturesweets (village SHGs and Gram Udyogs)
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Pros
Higher marginsbetter price tofarmershigher
volumeprocurement ofmilk.
Better use of
existing supplychain
Export Opportunity
Cons
New business,increasedcomplexity
New category,higher adexpenditure
Branded sweets,
not an easy switchfor consumers asyet.
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Exports and other product strategies
Other value added products
Butter & Cheese
Smaller SKUs
Contract Manufacturing from
other state MMFs Low Fat Low Sodium Table
Spreads
Penetration beyond metros andtier -1
Ghee
Commercial packs(15kgs)
Smaller SKUs for consumersegment
Exports
The Middle East, SAARC,ASEAN
No significant dairy processingfacilities
Zero import duty on specificdairy products
Significant cost advantage overEuropean manufacturers
Large Indian populace (est. 8million)
Opportunities Indian Sweets
Cottage Cheese
Condensed Milk
Table Spread
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SBU - EDIBLE OIL
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Challenges Challenges
Low margins
Low penetration of branded oils
Shrinking supply base (60% imported)
Opportunities
Growing demand
Leveraging existing supply chain
Rural market yet to be captured by branded players
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Strategy
Rationale:
Zero Percent Import duty on edible oils (40% ondairy products)
Stiff Competition from MNCs in the sector
Shifting trends towards Palm and Soyabean Oilsfrom Sunflower and Groundnut
Co-operative model for procurement ineffective(trials in MP 1995 for soyabean)
Scattered procurement hubs (beyond Gujarat)
0
2
4
6
8
10
12
14
01 02 03 04 05 06 07
3.13.4
5 5.6 66.65
7.44
5.14
5.16
5.36
5.41
5.59
5.63
5.7
Edible Oil Production VS Import (MMTPA)
India Production Import
Do not enter the segment. Transfer marketing
operations to NDDB
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SBU
PROCESSED FOODS
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Strategy
Rationale
Fruits and vegetables are dependent on environmental conditions andhence grown in geographically disparate locations.
Gujarat produces only guava, potato, onion, cumin and banana
GCMMF has always leveraged its deep roots in the state of Gujarat
whereas fruits and vegetables need procurement at a national level
This makes procurement a challenge.
Significant threat from the Farm to Fork Model of Private Players
Do not enter into fruits and vegetables processing
Focus only on Dairy
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Conclusion
GCMMFs competency is in milk procurement which is beingchallenged
Concentrate on growth in milk procurement and create large
entry barriers for competitors by enhancing supplier loyalty
Concentrate on further enhancing contributions of value addedmilk products
Look for business opportunities where simultaneousdevelopment of supplier and market is possible and profitable
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GCMMF(Corporate)
Dairy
(AMUL SBU 1)
EnhanceProcurement
Increase SupplierBase
IncreaseProcurementfrom existing
base
Increasecontribution from
value addedproducts
ExclusiveFranchiseRetailing
ExportOrientation
Edible Oil
(DHARA - SBU 2)
TransferOperations to
NDDB
Agro FoodProcessing
(SAFAL SBU 3)
TransferOperations to
NDDB
A dairy co-operativemarketingcompany
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THANK YOU