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It planned to make its products (butter and cheese) a part of the regular diet in most households. Amul launched its new products with the intention of increasing the offtake of its basic milk products, including cheese. This in turn was expected to increase the earnings of the farmers. The pizzas were expected to increase the sale of its cheese. The entry into the confectioneries market was another avenue for increasing milk consumption. This flurry of launches helped Amul broaden its appeal across all segments. Price was an advantage that Amul enjoyed over its competitors. Amul's products were priced 20-40 % less than those of its competitors. Analysts felt that Amul could price its products low because of the economies of scale it enjoyed.
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Amul created two new distribution set-ups: a cold chain for ice-cream, and another for limited life fresh foods like curd. Expecting the demand for ready-to- eat foods to grow, Amul prepared to leverage the ice-cream cold chain for a new range of frozen foods, beginning with pizza. However, some analysts felt that as the pizza's would be made by the retailers, Amul would have little control over the quality of the pizzas. That was why Amul was marketing the pizzas under the brand name SnowCap. Said S K Bhalla, Chief of Quality Control, "The product has received premature hype. Meeting consumer expectations will be a challenge, until we make the frozen pizza in our own facilities." According to some analysts, Amul's obsession with keeping down manpower costs and dealer commissions could be a weakness. |
In ice-creams for example, Amul's retail commission in Ahmedabad city was 17.5% which was 10% lower than what competitors offered. They also pointed out that Amul might not have the financial muscle that multinationals had to achieve rapid growth. However, all said and done, Amul seemed to be all set to make steady progress in the coming years with its products having become quite popular in both rural and urban households. Said Vyas, "We've handled liberalisation and globalisation far better than our transnational rivals. It has made us fitter than ever."
Exhibit I: Pizza Price Comparison
Exhibit II: Amul's Product Portfolio
Exhibit III: Market Share in Percentage (1999)
Case Code : MKTG014
Themes: Brand Management
Case Length : 7 Pages
Period : 1996-2001
Organization : Gujarat Cooperative Milk Marketing Federation
Pub Date : 2001
Teaching Note : Available
Countries : India
Industry : Food, Beverages & Tobacco
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