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The management adopted Total Quality Management (TQM) and
set for itself higher benchmarks (in terms of growth). They also diversified the
Amul portfolio, offering a range of food stuffs such as ketchup, jam, ice-cream,
confectionaries, cheese, and shrikhand[1]. According to some analysts, this
diversification was probably not entirely demand-driven. Being a cooperative,
GCMMF was compelled to buy all the milk that was produced in Gujarat. And with
milk production having increased since the mid 1990s, GCMMF had to make use of
additional milk, and hence the pressure to make and market more and more
processed-milk products.
Amul had to expand the consumption base of milk-based
products in India. 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. |
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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.
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 liberalization and globalization far
better than our transnational rivals. It has made us fitter than ever."
QUESTIONS FOR DISCUSSION
[1]
A dessert made of curd, cardamom, saffron leaves and sugar.
2001, ICMR (IBS Center for Management Research).All rights reserved. No part of this publication may be
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