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Gujarat Co-operative Milk Marketing Federation, Anand

Since the turn of 19th century, Cooperatives have existed as dominant forms of organization in the dairy industry around the world. Sometimes they have played the role of developing infant industry while at other times they have been used to strengthen weak production bases in an environment where market failures tend to be higher for marginal producers. n some other cases, a network of small producers have organized themselves to better market their products. !anagement of these cooperatives has also led to some interesting managerial insights for managers in emerging as well as developed economies. "arge emerging economies, e.g., ndia and China, have complexities that range from

development of markets #where the largest segment of population is the one which has low purchasing power$ to integration of low cost suppliers who are predominantly very small. %or firms that aspire to conduct substantial business in such markets, such complexities have to be recognized and then overcome. &nion or '!&" in ndia is an example of how to develop a network of firms in order to overcome the complexities of a large yet fragmented market like those in emerging economies by creating value for suppliers as well as the customers. '!&" has led the milk dairy revolution in ndia that has now emerged as one of the largest milk producers in the world.

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Gujarat Co-operative Milk Marketing Federation, Anand CHAPTER - 1

Achievements of the dairy cooperatives during the last 100 years

(uring the pre)independence era, public and private agencies dominated the dairy industry, although government policy did not favour any one organizational form. *arly efforts to organize dairying along cooperative lines were made immediately after the enactment of the Cooperative Societies 'ct, 191+. ,he present day -'nand .attern/ dairy cooperatives trace its origin to the establishment of a dairy cooperative at 'nand in 1901 under the direction and guidance of Sardar 2allabhbhai .atel. ,he dairy farmers of the then 3heda (istrict of 4u5arat organized themselves to form a dairy cooperative in order to directly undertake sale and processing of milk collected from member dairy farmers of the district. ,he government of ndia took some steps to improve the 6uality of milk animals and their productivity through the 3ey 2illage Scheme, launched as part of the %irst %ive)7ear .lan #1981)81$ and the ntensive Cattle (evelopment .lan, launched under the ,hird %ive)7ear plan #1911)11$. 9owever, in the absence of a stable and remunerative market for milk, production remained more or less stagnant. (uring the two decades between 1981 and 19:;, milk production grew by barely 1 per cent annually, while per capita milk availability declined by an e6uivalent amount. (uring the 191;s, various state governments tried different strategies to develop dairying, including establishing dairies run by their own departments, setting up cattle colonies in urban areas, and organizing milk schemes. 'lmost invariably, dairy processing plants were built in cities rather than in the milk sheds where milk was produced. ,his urban orientation to milk production led to the establishment of cattle colonies in !umbai, Calcutta, and !adras. ,he ob5ective was to meet the demand for milk and milk products in big cities through improvements in milk collection, processing, and distribution.

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Gujarat Co-operative Milk Marketing Federation, Anand

,he <peration %lood #<%$ programme implemented by the =ational (airy (evelopment >oard #=((>$ from 19:; to 1991 played the key role in bringing about the transformation in dairy development in the country. ,he <% programme established milk producers/ cooperatives in villages and made modern technology available to them. ,he broad ob5ectives were to increase milk production #?a flood of milk?$, augment rural incomes, and transfer to milk producers the profits of milk marketing that were hitherto en5oyed by well)to)do middlemen.

,he importance of <peration %lood lies in its focus on small rural producers. "ucrative alternate employment opportunities are often not available in ndian villages, making dairying an attractive option for many villagers. "ow capital intensity, a short operating cycle, and steady returns make dairying a preferred activity among marginal #less than one hectare of land holding$ and small farmers #those having 1)+ hectares of land holding$, who make up about 8: per cent of rural households in ndia. (airying is feasible even for the landless, which depend for fodder on common grazing and forest lands. =early :; million ndian households hold a total of 9@ million cows and buffaloes. ' ma5ority of milk producers have one or two milk animals, and these small producers account for some :; per cent of the milk production. <n average, ++.8 percent of the income of rural households is contributed by milk.

,he <peration %lood programme is based on what are known as 'nand .attern dairy cooperatives, referring to their origin in 'nand (istrict in the state of 4u5arat. Starting in 19:;, =((> replicated the 'nand .attern cooperatives through the <% programme all over ndia. &nder the 'nand .attern structure, individual farmers are 5oined in village)level dairy cooperative societies #(CS$, which are 5oined to form district)level unions, which in turn are 5oined in state)level marketing federations.

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Gujarat Co-operative Milk Marketing Federation, Anand

n each state, the 'nand .attern featuresA (ecentralized milk production by the small milk producersB !ilk procurement by the village)level dairy cooperative societiesB Centralized milk processing by the district)level unionsB and !arketing of milk and milk products by the state)level federation.

,he primary milk producers democratically govern this entire federal cooperative structure to ensure that the higher)tier organizations serve the purpose of the lower levels and that the gains at all levels flow back to the milk producers in significant measure. ,he core feature of the 'nand .attern model is farmer control of the three stages following production, that is, procurement, processing, and marketing of milk and milk products. ,he value added at the procurement and processing stages can be realized by the cooperatives only through control over marketing, which is therefore an essential re6uirement for success. n contrast, many dairy cooperatives worldwide end up as suppliers of raw material to private companies that own the brands and control marketing. >y cutting out the need for middlemen in procuring and selling milk, the 'nand .attern cooperatives have helped to reduce seasonal price variations and have enabled the farmers to en5oy the fruits of their labour instead of surrendering most of the profit to corrupt and exploitative middlemen. Consumers too have benefited. n +;;C, dairy cooperatives accounted for the ma5or share of processed li6uid milk marketed in ndia. !ilk reaches consumers in :8; towns and cities through the =ational !ilk 4rid network. <ver the years, brands of dairy products created by the cooperatives have become known for 6uality and value. Achievements of the Dairy Cooperatives in ndia till !00"-0# Reach ,he dairy cooperative network is owned by nearly 1+ million farmer members. ,hese producers are grouped in nearly 1, ;@,8:0 village)level dairy cooperative societies. ,he societies are grouped in 1:; district)level unions spanning CC@ districts.

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Gujarat Co-operative Milk Marketing Federation, Anand

,he unions make up ++ state)level marketing federations.

$il% production ndia/s milk production increased from +1.+ million metric tons in 191@D19 to @@.1 million metric tons in +;;0);8 .er capita availability of milk increased from 11+ grams per day in 191@D19 to +C1 grams day in +;;0);8. ndia/s C.@ percent annual growth of milk production surpasses the + per cent growth in populationB the net increase in availability is around + per cent per year.

$ar%eting n +;;0);8 average daily cooperative milk marketing stood at 10.@: million litersB annual growth has averaged about 0.+ per cent compounded over the last five years. (airy cooperatives now market milk in about +;; classes me cities including metros and some 88; smaller towns. (uring the last decade, the daily milk supply has increased from 1:.8 to 8+ liters per 1,;;;

urban consumers. nnovation >ulk vending saves money and conserves the environment. !ilk travels as far as +,+;; kilometers to areas of shortage, carried by rail and road milk tankers. ndia produces 98 per cent of its own dairy e6uipment, saving valuable foreign exchange. !acro impact ,he annual value of ndia/s milk production amounts to about Es.@@; billion. (airy cooperatives generate employment opportunities for about 1+ million farm families.

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Gujarat Co-operative Milk Marketing Federation, Anand

LDRP Institute of Technology & Research, Gandhinagar

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Gujarat Co-operative Milk Marketing Federation, Anand CHAPTER - !

&A$E '( E&TERPR )E $other dairy* +andhinagar. #' &nit of 4u5arat Co <perative !ilk !arketing %ederation$
Address .lot no)C8, =ear ndira >ridge, 'hmedabad)4andhinagar 9ighway, 2illageA >hat C@+0+@ Regional 'ffice 4u5arat Co)operative !ilk !arketing %ederation "td. 'mul (airy Eoad, 'nand ) C@@;;1 Auditor S.E. >atlibol F Co.

Esta,lishment ,his unit was established in September 19, 1990. -rand name 'mul Total mil% handling capacity +8 lakh liters per day

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Gujarat Co-operative Milk Marketing Federation, Anand CHAPTER - .

+C$$(/ An 'vervie0

4u5arat Co)<perative !ilk !arketing %ederation "td. is an 'pex Co)<perative <rganization. t is respected for its credentials even after 81 years after its inception. ,he Co)<perative movement started with two villages and +0: liters of milk in 1901. t has become a rupees one billion)business now. ,he success of 'mul explains the reasons for this remarkable growth. %ollowing the strategic advice from the freedom fighters like Sardar 2allabhai and !orar5i (esai, the Co)<perative movement started with the slogan GEemove middlemenH in 4u5arat by the village masses. ,he collective farmers succeeded in making the >ritish government accept the concept of Co)<perative societies. ,he 3aira (istrict Co)<perative !ilk .roducers union "td., 'nand was born on (ec 10, 1901. 4C!!% is a winner of the prestigious international C < 1;; award from (4Is C < !agazine, &S'. ,he +;;C C < 1;; award recognizes the organisations around the world that excel in positive business performance through resourceful , management and best practices. ,his C < nternational , excellence 'ward has recognised the Cooperative !ovement F its "eadership under the ?'mul? brand, initiated by (r. 2 3urien, !ilkman of ndia, whose main !otto is to build ndian Society economically F literally strong through innovative cooperative resourceful network, so as to provide 6uality service F products to the end consumers and good returns to the farmer members. ,his award has also given direction that , need to be encouraged F adopted more F more at grass root level and bridge the digital divide through proper training, re)training so as to bring radical change F benefit to the ndian society.

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Gujarat Co-operative Milk Marketing Federation, Anand

t has also recognised the !anaging (irector, !r. > ! 2yas, who has taken , initiative by setting the direction 1+C$$( as T Company in (ood ,usiness1 . t has also inspired all the employees of 4C!!% *nterprise to sustain the challenges as a ?Change 'gent? by excelling their , skills in order to transform the people around them towards , ntegration #e)2ision$ on both the ends of supply chain #2illage level %armer to end consumer$. ,his award also motivated the each F every member dairy, 'mulIs wholesale distributors, retailers, transporters and suppliers who have supported whole)heartedly the , initiatives of 4C!!%.

State Marketing Federation All Dairies in State

District Milk Processing Union Every in the District

Village Co-operative Society All Villages in a District

,he first lesson in milk marketing was learnt when an assured outlet for milk in >ombay stimulated increased milk collection in the villages of 3aira (istrict. !ore and more farmers 5oined hands in all the villages to successfully negotiate the increased demand for the milk. ,he >ombay milk scheme did not accept all the milk that is procured by the Co)operative society. Setting up of a dairy processing unit was a way to solve the problem. ,here was a need felt for the (airy plant to process and utilize the milk supplied by the society and as a result the dairy was setup in 1998.

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Gujarat Co-operative Milk Marketing Federation, Anand

,o market the products of the milk unions, 4C!!% was formed in 19:C. 4C!!% is the sole marketer for all the range of 'mul products. <riginally they were only milk powder and butter. "ater it is expanded drastically to cover products such as D ice creams, pizza, ghee, cheese, chocolates, shrikhand, and paneer and so on. ,hese made 'mul the leading food brand in ndia.

State Marketing Federation: All Dairies in a State


GCMMF in Gujarat

District Dairy: Every District in the State


13 District Unions in Gujarat

Village Cooperative Society: All Villages in a District


10,675 villag s in Gujarat

Milk Producers: All

ilk producers in a village

2!2 "illion in Gujarat

,wo leading figures of the ndian dairy industry D ,ribhuvandas .atel and (r. 2. 3urein made Co)<perative movement to succeed. ,he only reason for the success of 4C!!% as (r. 2. 3urein statedA G(etermination, (edication, (iscipline are forming the driving forces of the 'mulH ,he 4C!!% consists of 1+ affiliated member (airies J (istrict milk unions and it has its own manufacturing unit called !other (airy at 4andhinagar with the largest network in food industry supported by marketing and distribution of li6uid milk and a variety of products under the brands D 'mul and Sagar.

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Gujarat Co-operative Milk Marketing Federation, Anand

t is also the sole selling agent for the =ational (airy (evelopment >oard/s #=((>$ edible oil D -(9'E'/. 4C!!% also coordinates with the manufacturing dairy units for production planning and milk procurement and handles the distribution of milk from surplus union to the deficit areas.

4C!!%" is in a state where it is growing rapidly and it is one amongst the most respected ndian companies in +;;C. t is because of the values and systems that are in place. 's a Chinese proverb says, G's long as the trunk is firm, worry not about the branches swinging to the wind.H 4C!!%" is trying to strengthen its rural base D ,he 2illage Cooperatives D to ensure the lead in the dairy business.

(armers

2illage Cooperative )ocieties

$em,er 4nion

+C$$(3

Distri,ution

Retailers

10,675 2!2 "illion nu"# rs 10,675 Coo$ rat iv %oci ti s


Prodn5 'f $il% $il% Collection

Coo$! %oci ti s 12 units 10000 "$


700 &M' 3000 500,000

$il% Processing

$ar%eting

Distri,ution

Retailing

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Gujarat Co-operative Milk Marketing Federation, Anand

+C$$(/ Today
4u5arat Cooperative !ilk !arketing %ederation #4C!!%$ is ndiaIs largest food products marketing organization. t is a state level apex body of milk cooperatives in 4u5arat which aims to provide remunerative returns to the farmers and also serve the interest of consumers by providing 6uality products which are good value for money. 4u5arat Cooperative !ilk !arketing %ederation or 4C!!% is the marketing entity for products of all &nions in the State of 4u5arat+. 4C!!% has 0+ regional distribution centers in ndia, serves over 8;;,;;; retail outlets and exports to more than 18 countries. 'll these organizations are independent legal entities yet loosely tied together with a common destinyK # n a recent survey 4C!!% was ranked amongst the top ten %!C4 firms in the country while '!&" was rated the second most recognized brand in ndia amongst all ndian and !=C offerings$.
$em,ers/

1C district cooperative milk producersI &nion

&o5 of Producer $em,ers/ &o5 of 2illage )ocieties/ Total $il% handling capacity/ $il% collection 6Total - !007-089/ $il% collection 6Daily Average !007-089/ $il% Drying Capacity/ Cattle feed manufacturing Capacity/

+.1; million 1+,:9+ 1;.11 million liters per day +.C@ billion liters :.1 million liters 890 metric ,ons per day +10;!ts per day

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Gujarat Co-operative Milk Marketing Federation, Anand


Rs (million) 11140 13790 15540 18840 22192 22185 22588 23365 27457 28941 29225 37736 42778 US $ (in million) 355 400 450 455 493 493 500 500 575 616 672 850 1050

Sales Turnover 1994-95 1995-96 1996-97 1997-98 1998-99 1999-00 2000-01 2001-02 2002-03 2003-04 2004-05 2005-06 2006-07 2007-08

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Gujarat Co-operative Milk Marketing Federation, Anand

)A3E) T4R& '2ER PER :EAR

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Gujarat Co-operative Milk Marketing Federation, Anand CHAPTER - " 3ist of Products $ar%eted/

-read spreads/
'mul >utter 'mul "ite "ow %at >read spread 'mul Cooking >utter

Cheese Range/ 'mul .asteurized .rocessed Cheddar Cheese 'mul .rocessed Cheese Spread 'mul .izza #!ozarella$ Cheese 'mul Shredded .izza Cheese 'mul *mmental Cheese 'mul 4ouda Cheese 'mul !alai .aneer #cottage cheese$ &tterly (elicious .izza

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Gujarat Co-operative Milk Marketing Federation, Anand

$ithaee Range 6Ethnic s0eets9/ 'mul Shrikhand #!ango, Saffron, 'lmond .istachio, Cardamom$ 'mul 'mrakhand 'mul !ithaee 4ulab5amuns 'mul !ithaee 4ulab5amun !ix 'mul !ithaee 3ulfi !ix 'vsar "adoos

4HT $il% Range/ 'mul Shakti CL fat !ilk 'mul ,aaza 1.8L fat !ilk 'mul 4old 0.8L fat !ilk 'mul "ite Slim)n),rim !ilk ;L fat milk 'mul Shakti ,oned !ilk 'mul %resh Cream 'mul Snowcap Softy !ix

Pure +hee/ 'mul .ure 4hee Sagar .ure 4hee 'mul Cow 4hee

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Gujarat Co-operative Milk Marketing Federation, Anand

nfant $il% Range/ 'mul nfant !ilk %ormula 1 #;)1 months$ 'mul nfant !ilk %ormula + #1 months above$ 'mul Spray nfant !ilk %ood

$il% Po0ders/ 'mul %ull Cream !ilk .owder 'mulya (airy Mhitener Sagar Skimmed !ilk .owder Sagar ,ea and Coffee Mhitener

)0eetened Condensed $il%/ 'mul !ithaimate Sweetened Condensed !ilk

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Gujarat Co-operative Milk Marketing Federation, Anand

(resh $il%/ 'mul ,aaza ,oned !ilk CL fat 'mul 4old %ull Cream !ilk 1L fat 'mul Shakti Standardized !ilk 0.8L fat 'mul Slim F ,rim (ouble ,oned !ilk 1.8L fat 'mul Saathi Skimmed !ilk ;L fat 'mul Cow !ilk

Curd Products/ 7ogi Sweetened %lavored (ahi #(essert$ 'mul !asti (ahi #fresh curd$ 'mul !asti Spiced >utter !ilk 'mul "assee

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Gujarat Co-operative Milk Marketing Federation, Anand

Amul ce creams/ Eoyal ,reat Eange #>utterscotch, Ea5bhog, !alai 3ulfi$ =ut)o)!ania Eange #3a5u (raksh, 3esar .ista Eoyale, %ruit >onanza, Eoasted 'lmond$ =atureIs ,reat #'lphanso !ango, %resh "itchi, Shahi 'n5ir, %resh Strawberry, >lack Currant, Santra !antra, %resh .ineapple$ Sundae Eange #!ango, >lack Currant, Sundae !agic, (ouble Sundae$ 'ssorted ,reat #Choc)bar, (ollies, %rostik, ce Candies, ,ricone, Choc crunch, !egabite, Cassatta$ &tterly (elicious #2anilla, Strawberry, Chocolate, Choc chips, Cake !agic$

Chocolate ; Confectionery/ 'mul !ilk Chocolate s 'mul %ruit F =ut Chocolate

-ro0n -everage/ =utramul !alted !ilk %ood

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Gujarat Co-operative Milk Marketing Federation, Anand

$il% Drin%/ 'mul 3ool %lavored !ilk #!ango, Strawberry, Saffron, Cardamom, Eose, and Chocolate$ 'mul 3ool Cafe

Health -everage/ 'mul Shakti Mhite !ilk %ood

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Gujarat Co-operative Milk Marketing Federation, Anand


CHAPTER - #

*very day 'mul collects 00:,;;; liters of milk from +.1+ million farmers #many illiterate$, converts the milk into branded, packaged products, and delivers goods worth Es 1 crore #Es 1; million$ to over 8;;,;;; retail outlets across the country. ts supply chain is easily one of the most complicated in the world. 9ow do managers at 'mul prevent the milk from souringN Malk in to any 'mul or 4u5arat Cooperative !ilk !arketing %ederation #4C!!%$ office, and you may or may not see a photograph of !ahatma 4andhi, but you will certainly see one particular photograph. t shows a long line of 4u5arati women waiting patiently for a union truck to come and collect the milk they have brought in shining brass matkas. ,he picture is always prominently displayed. ,he message is clearA never forget your primary customer. f you donIt, success is certain. ,he proof is a uni6ue, Es +,+;; crore #Es ++ billion$ enterprise. 'rgani<ation structure t all started in (ecember 1901 with a group of farmers keen to free themselves from intermediaries, gain access to markets and thereby ensure maximum returns for their efforts. >ased in the village of 'nand, the 3aira (istrict !ilk Cooperative &nion #better known as 'mul$ expanded exponentially. t 5oined hands with other milk cooperatives, and the 4u5arat network now covers +.1+ million farmers, 1;,011 village level milk collection centers and fourteen district level plants #unions$ under the overall supervision of 4C!!%. ,here are similar federations in other states. Eight from the beginning, there was recognition that this initiative would directly benefit and transform small farmers and contribute to the development of society.

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Gujarat Co-operative Milk Marketing Federation, Anand

!arkets, then and even today are primitive and poor in infrastructure. 'mul and 4C!!% acknowledged that development and growth could not be left to market forces and that proactive intervention was re6uired. ,wo key re6uirements were identified. ,he first, that sustained growth for the long term would depend on matching supply and demand. t would need heavy investment in the simultaneous development of suppliers and consumers. Second, that effective management of the network and commercial viability would re6uire professional managers and technocrats. ,o implement their vision while retaining their focus on farmers, a hierarchical network of cooperatives was developed, which today forms the robust supply chain behind 4C!!%/s endeavorsN ,he vast and complex supply chain stretches from small suppliers to large fragmented markets. !anagement of this network is made more complex by the fact that 4C!!% is directly responsible only for a small part of the chain, with a number of third party players #distributors, retailers and logistics support providers$ playing large roles. !anaging this supply chain efficiently is critical as 4C!!%Is competitive position is driven by low consumer prices supported by a low cost system. ntroducing higher value products >eginning with li6uid milk, 4C!!% enhanced the product mix through the progressive addition of higher value products while maintaining the desired growth in existing products. (espite competition in the high value dairy product segments from firms such as 9industan "ever, =estle and >ritannia, 4C!!% ensures that the product mix and the se6uence in which 'mul introduces its products is consistent with the core philosophy of providing milk at a basic, affordable price.

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Gujarat Co-operative Milk Marketing Federation, Anand

The distri,ution net0or% 'mul products are available in over 8;;,;;; retail outlets across ndia through its network of over C,8;; distributors. ,here are 0: depots with dry and cold warehouses to buffer inventory of the entire range of products. 4C!!% transacts on an advance demand draft basis from its wholesale dealers instead of the che6ue system adopted by other ma5or %!C4 companies. ,his practice is consistent with 4C!!%Is philosophy of maintaining cash transactions throughout the supply chain and it also minimizes dumping. Mholesale dealers carry inventory that is 5ust ade6uate to take care of the transit time from the branch warehouse to their premises. ,his 5ust)in)time inventory strategy improves dealersI return on investment #E< $. 'll 4C!!% branches engage in route scheduling and have dedicated vehicle operations. $anaging the supply chain *ven though the cooperative was formed to bring together farmers, it was recognized that professional managers and technocrats would be re6uired to manage the network effectively and make it commercially viable. Coordination 4iven the large number of organizations and entities in the supply chain and decentralized responsibility for various activities, effective coordination is critical for efficiency and cost control. 4C!!% and the unions play a ma5or role in this process and 5ointly achieve the desired degree of control.

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Gujarat Co-operative Milk Marketing Federation, Anand

>uy)in from the unions is assured as the plans are approved by 4C!!%Is board. ,he board is drawn from the heads of all the unions, and the boards of the unions comprise of farmers elected through village societies, thereby creating a situation of interlocking control.,he federation handles the distribution of end products and coordination with retailers and the dealers. ,he unions coordinate the supply side activities.,hese include monitoring milk collection contractors, the supply of animal feed and other supplies, provision of veterinary services, and educational activities. $anaging third party service providers %rom the beginning, it was recognized that the unionsI core activity lay in milk processing and the production of dairy products. 'ccordingly, marketing efforts #including brand development$ were assumed by 4C!!%. 'll other activities were entrusted to third parties. ,hese include logistics of milk collection, distribution of dairy products, sale of products through dealers and retail stores, provision of animal feed, and veterinary services. t is worth noting that a number of these third parties are not in the organized sector, and many are not professionally managed with little regard for 6uality and service. ,his is a particularly critical issue in the logistics and transport of a perishable commodity where there are already weaknesses in the basic infrastructure. Esta,lishing ,est practices ' key source of competitive advantage has been the enterpriseIs ability to continuously implement best practices across all elements of the networkA the federation, the unions, the village societies and the distribution channel. n developing these practices, the federation and the unions have adapted successful models from around the world. t could be the implementation of small group activities or 6uality circles at the federation. <r a ,O! program at the unions. <r housekeeping and good accounting practices at the village society level.

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!ore important, the network has been able to regularly roll out improvement programs across to a large number of members and the implementation rate is consistently high. %or example, every %riday, without fail, between 1;.;; a.m. and 11.;; a.m., all employees of 4C!!% meet at the closest office, be it a department or a branch or a depot to discuss their various 6uality concerns. *ach meeting has its pre)set format in terms of .urpose, 'genda and "imit #.'"$ with a process check at the end to record how the meeting was conducted. Similar processes are in place at the village societies, the unions and even at the wholesaler and CF% agent levels as well. *xamples of benefits from recent initiatives include reduction in transportation time from the depots to the wholesale dealers, improvement in E< of wholesale dealers, implementation of Pero Stock <ut through improved availability of products at depots and also the implementation of Qust)in),ime in finance to reduce the float. 3aizens at the unions have helped improve the 6uality of milk in terms of acidity and sour milk. #&ndertaken by multi)disciplined teams, 3aizens are highly focused pro5ects, reliant on a structured approach based on data gathering and analysis.$ %or example, Sabar &nionIs records show a reduction from +.;L to ;.8L in the amount of sour milkJcurd received at the union. ,he most impressive aspect of this large)scale roll out is that improvement processes are turning the village societies into individual improvement centers.

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CHAPTER - =

4& T PR'( 3E !other (airy, 4andhinagar #!(4$ is a unit of 4u5arat Cooperative !ilk !arketing %ederation #4C!!%$ "td., which markets its products under '!&" F S'4'E brand. ,he plant was set)up at 4andhinagar with a strategic intent of catering to re6uirement of fresh and wholesome milk of consumers of 'hmedabad and nearby cities and to handle every drop of surplus milk from member dairies of 4u5arat and hence play a role of !other. ,he most modern, ."C based automated dairy processing plant with in)built capability to produce milk products matching to the best 6uality standards was set)up in the year 1990 with a capacity to handle +8 lac litre of milk per day. !(4 was commissioned in September 1990 by "F, with assistance of '.2)(enmark, Mestphalia) 4ermany, =iro)Sweden and =u)con )=ew Pealand. ,he dairy initially had "i6uid !ilk, .ouch %illing, >utter <il plant F !ilk .owder .lant. ,o keep pace with changing time ce Cream plant, &9, plant, .ouch filling *xpansion .ro5ect and !ozzarella Cheese plant were installed subse6uently. Eecently, the milk processing capacity has been increased from 1; "".( to 1@ "".(. t is estimated that in the year +;1;, !(4 would receive C8 "".( of milk. ,o meet this re6uirement, !other (airy expanding its milk handling capacity by installing 1;; !,.( milk powder plant as a 1st phase of expansion for which work has already been started and would be completed in the period of next ;0 months. ,he plant would be of state of the art in terms of civil structural engineering and most modern process technology and automation. n the +nd phase, we will have another +; "".( milk processing line and butter processing and packing facilities. n the Crd phase of expansion, there would be another 1;; !,.( milk powder plant.

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,he vast and varied product portfolio includes !arket !ilk, 4hee, !ilk powders, ce Cream, &9, milk and milk products and Cheese. ,he other product portfolios apart from milk and milk products are Soup, 3adhi and .izza. ,he plant is professionally managed and has adopted world)class 6uality management systems and 6uality initiatives like S< 9;;1)+;;;, 9'CC. 9;;1)+;;;, S< 10;;1, ,otal .roductivity !aintenance, Six Sigma, ,otal *nergy !anagement, *nergy !anagement System etc.

Pouch )ection
.ackaging of 'mul milk made product is an important aspect of !other (airy plant. 'fter processing of !ilk it is packed in polyethylene pouches to prevent deterioration in edible 6uality. !other (airy, 4andhinagar has a separate pouch section. Mith .E*.'C and S'!'E.'= machine each having capacity of C;;; lt.Jhr. or 1;;; pouches of 8;; mlJhr. and 8+;; pouches of 8;; mlJhr. ,otal no. of lines for pouch packaging are @ with +9 no. of machines at !other (airy, 4andhinagar. Aims of Packaging dentification of product .rotection against damage >iochemical damage *xternal contamination #.hysical, odor, paste, microorganisms$ .ilfering

"egal or information reason Stating the recipe J ingredients Stating the manufacturing J expired date Stating the manufacturing price Stating the location of manufactures

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!arketing reasons 'dvertising and reminder for future purchases !aking offer 2isual attraction 'pparent 2alue

Ouality J 4uarantee reasons 'ddress for return dentification for follow up Stating weight J volume J Composition J no. of contents

,echnical reasons !arking to ensure accurate registration of design !arking to identify product for future handling

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Dispatch Department
,his section works in accordance with milk marketing section. ,he decision of milk made ie pouch packing product to be dispatched is taken by the marketing section and orders are issued for loading of vehicles. ,his section also includes maintenance of records relating to cold storage, milk products received from milk unions, products dispatched. ,his section is playing monitor role in the !other (airy/s distribution and transportation network.

Schedule for dispatch 15 "ocal dispatch 6P5$59 D ncludes 'hmedabad !5 &p Country dispatch D (istributors other than 'hmedabad. .5 "ocal (ispatch 6A5$59 "5 'mul .arlors A "ocal dispatch ,otal "ocal distributors &p Country 'mul .arlors ) 1+8 ) :8 ) C8

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$ar%eting Department

,he !arketing (epartment is playing an important role in !other (airy, 4andhinagar. ,he department is mainly responsible for marketing and sales activities of 'mul products. !other (airy, 4andhinagar made a special sales force for handling marketing and sales activities in 'hmedabad city. ,he !arketing (epartment compiles its activities with other departments like (ispatch, .ackaging, and .rocess (epartment for running smooth activities of !other (airy, 4andhinagar. ,he main working criterion of marketing team is to handle milk distribution in 'hmedabad city. !arketing staff of !other (airy, 4andhinagar have complete responsibility of sales and promotion of 'mul .roduct in 'hmedabad city. ,he !arketing (epartment organizes free sampling, home to home, and kiosk activities for marketing purpose of 'mul .roduct launched newly. ,he department time to time conducts some surveys for 'mul newly launched product as well as other milk and milk related products. ,he hierarchy for 'mul .roduct F milk marketing is shown as underB

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n-charge $$'

n)charge *ast

n charge Mest

%SE

%SE

.S! #0$

.S! #0$

%SE)%iled Sales Eepresentative, .S!).ilot Sales !anager

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Gujarat Co-operative Milk Marketing Federation, Anand

)4R2E:
' Survey is the research techni6ue, which is used to gather information from a sample of respondent by employing a 6uestionnaire. Surveys are normally carried out to obtain primary data. .rimary data is the data which gather first hand to answer the research 6uestion being investigated. Surveys are conventionally conducted by meeting the respondent in person or contacting them through the telephone. ,he method of collecting information by asking a set of pre)formulated 6uestion in a predetermined se6uence in a structured 6uestionnaire to a sample of individual drawn so as to representative of a defined population is known as survey research.

Survey can be classified on basis of the method of communication, the degree of structured and the amount of disguise in 6uestionnaire. 'nd the timeframe for data collection, deal with the classification in terms of 6uestionnaire structure, disguise and the timeframe, following which the classification based on mode of communication.

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)4R2E: $ETH'D)
Surveys are conducted through interviews and are generally classified based on the method of communications used in the interview. .ersonal interviews ,elephonic interviews Self) administrated interviews !ail surveys

.ersonal interviewsA) personal interviews are characterized by the presence of for entities

%eed backA) the opportunity to clarify the doubts of the interviewee is one of the feature that put personal interviews ahead of other methods of gathering data. ' respondent hesitate to provide sensitive information can be assured of the confidentially of the information provided. .robingA) t has the advantage of probing the respondent for complex answers. ' respondent might reveal her likesJdislikes for a certain soft drink which is no use to the researcher. "ength of interviewA ) t is appreciably better in personal. t is easy for reluctant respondent to hang up the phone or not respondent to a mail rather than avoid someone in face to face interview.

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RE)EARCH '->ECT 2E
!y key research ob5ectives include studying Eetailers advantages and disadvantages located near by mall area in 'hmedabad and 4andhinagar market selling amul product i.e. milk, buttermilk, .aneer, curd, "asee. ,he main points under the study are to get the information from retailers that due to opening of mall they get benefited or have loss in their business . ,he benefit of this report, the changing demand of the retailers, the need of the retailers and the problems of retailers. have studied the Eetailers advantages and disadvantages located near by mall area in 'hmedabad and 4andhinagar market selling amul product and hence gear up my resources to match the retailers expectation and hence to capitalization on the same. Eesearch designA the research design is a conclusive research, which follows a multiple cross sectional design the characteristics and expectation of the retailers of 'mul. ,he nature of the research is both 6uantitative and 6ualitative.

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?4E)T '&&A RE DE) +&


Ouestionnaire design is a vital issued in interviewing. ' properly designed 6uestionnaire can tap the necessary information from the respondent. ,herefore researchers always design a tactful set of 6uestion to probe and prompt of the interview to give useful answers. Ouestionnaires fall under varies categories such as structured unstructured disguised and undisguised.

TAR+ET RE)P'&DE&TA) n my survey have primarily targeted Eetailers from almost all areas of 'hmedabad and 4andhinagar city located within 1 km range from shopping mall. !ainly targeted E*" '=C* %E*S9, S.*=C*E,!<E*..., =( '>&""S. divided survey in two parts east and west. 's per my survey my target people are Eetailers. So made the 6uestionnaire according to the target people.

3eeping all the above listed points in view, designed 6uestionnaires. ,he length of the 6uestionnaires was so that it took some minutes from one person to fill a form. )ources of data .rimary data was collected by visiting distributor and at 'mul .arlor in the city of 'hmedabad and 4andhinagar. nternet was used to collect the secondary data regarding 4C!!% #4u5arat co)operative milk marketing federation$ and 'mul.

)ampling si<e/ - #0

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Data collection/'ll primary data has been gathered with the help of a structured 6uestionnaire by conducting a personal interview with the respondents, which was done through visiting people of 'hmedabad city.

Data Analysis/ ,he data collected was first properly tabulated. ,hen the tabulated data was used for percentage calculation of each 6uestion, which is graphically shown with the help of pie charts, >ar charts and tables.

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S!"# Analysis o$ AMU%

Organizations have certain characteristics-strengths-which make them uniquely adapted to carry out their tasks. onversely they have other !eatures-weakness-which inhi"it their a"ility to !ul!ill their purposes. (o)ar* (! %t v nson

SM<, is an acronym for the internal )trengths and @eaknesses of a firm and the environmental 'pportunities and Threats facing that firm. SM<, analysis is an easy techni6ue through which managers create a 6uick overview of a company/s strategic situation. SM<, analysis is grounded on the principal that strategy must produce a strong fit between a company/s internal capability #its strengths and weaknesses$ and its external situation #which are its opportunities and threats$. *ach elements of SM<, will be discussed in the following paragraphs.

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Gujarat Co-operative Milk Marketing Federation, Anand

)trengths/
Strength is a resource, skill, or other advantage relative to competitors and the needs of the markets 'mul serves or expects to serve. Strength of 'mul is its distinctive competence, which gives a comparative advantage in the industry. 's an example 'mul have many types of distinctive competence as manufacturing excellence, good 6uality control, superior design capability, customer loyalty, location, and a strong distribution network. t will be easier to develop competitive advantage in a market when 'mul has a distinctive competence in one of the key re6uirements for market success, when rival companies have no offsetting competences, and rivals can/t match the competence without spending much time and money. %rom a strategy making perspective, 'mul/s strengths are significant because they can be the cornerstones of a strategy and the basis on which to build competitive advantage. ,his part of the SM<, is very important because, strategy should be grounded on 'mul/s best skills and market strengths.

Potential nternal )trengths ' distinctive competence 4ood competitive skill Mell thought of by buyers 'n acknowledged market leader Mell)conceived functional area strategies >etter advertising campaigns .roduct innovation skills .roven management >etter manufacturing capability Superior technological skills

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Gujarat Co-operative Milk Marketing Federation, Anand


@ea%nesses/

Meakness is a limitation or deficiency in resource, skills, or capabilities that seriously impedes 'mul/s effective performance. ' weakness can be strategically important or not, depending on how much it matters in the competitive battle the 'mul is in. ' good strategy necessarily needs to aim at correcting weaknesses that make the company vulnerable or that dis6ualify it from pursuing an attractive opportunity. %inding out the weaknesses of the 'mul is not so easy. %or more accurate analysis, weaknesses should be searched from the management point of view and also from the 'mul/s competitors.

Potential nternal @ea%nesses =o clear strategic direction <bsolete facilities !issing some key skills or competence <rganizational .olitic .lagued with internal operating problems

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'pportunities/

<pportunity is a ma5or favorable situation in 'mul/s environment. !arket opportunity is a big factor in shaping a 'mul/s strategy. 9owever, there is an important distinction between industry opportunities and 'mul opportunities. <pportunities seem more linked to the external environment than strengths and weaknesses, but this is not always the case. <pportunities for improvement and new ventures exist within the organization. Mhat are opportunities depend on the resources available an uncommitted. ,he following list gives some suggestions to help identify the main opportunities facing 'mul. !arket share *xperience %inancial strength ,echnological leadership 4ood products #especially trade names$ "ow cost *conomies of scale (istribution system Skilled personnel %avorable public image.

Potential EAternal 'pportunities Serve additional customer groups *nter new market or segments *xpand product line to meet broader range of customer needs (iversify into related products Complacency among rival organizations %aster market growth

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#hreats:
+,r at is a "ajor un-avora#l situation in ."ul/s nviron" nt! +,r ats ar 0 1 i"$ *i" nts to t, ."ul/s curr nt or * sir * $osition! (istoricall1, t,r ats ,av # n * -in * in t r"s ot, ."ul/s co"$ titors, #ut "or r c ntl1 t, -ocus ,as 2$an* * to inclu* gov rn" nt, unions, soci t1, an* ot, r sta0 ,ol* rs! Man1 ti" s t, t,r ats ar out o- "anag " nt/s control! 3 caus o- t,is it is v r1 i"$ortant to co$ )it, t,r ats! +,r ats ar not also co" -ro" 2t rnal nviron" nt! +, r can # cas s, t,at t, int rnal nviron" nt o- t, -ir" is t, sourc s o- t,r at!

Potential EAternal Threats *ntry of competitors in home market Eising sales of substitute products Slower market growth Costly regulatory re6uirements 2ulnerability to recession and business cycle 4rowing bargaining power of customers or suppliers Changing buyer needs and tastes 'dverse demographic changes

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15 Are you selling the follo0ing productB


Response Ta,le/ $il% 100 -uttermil% C= Curd 80 Paneer #= 3assie ""

-ar Chart of Data Ta,le/

Amul products (Ratio)


100 90 80 70 60 50 40 30 20 10 0 100

96 80 56 44

Milk

Buttermilk

Curd products

Paneer

Lassie

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,his 6uestion was asked to know about the amul .roducts packed in pouches because retailers may be selling other brand products having more margins. 's asking this 6uestion to the retailers came to know about the result that all retailers were selling milk, C= D buttermilk, 80 D curd, 81 D .aneer, and ""D lassie.

!5 (rom ho0 many years are you in this ,usinessB


Response Ta,le/

0 to 4 Yrs 64

5 to 8 Yrs 28

9 to 12 Yrs 4

More 4

Pie Chart of Data Ta,le:

Business duration

28

64

LDRP Institute of Technology & Research, Gandhinagar


0 to 4 5 to 8 9 to 12 more

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,his 6uestion was asked to know about the experience of the retailer in this field means from how many years he is doing this business >y asking this 6uestion came to know that ="D retailers were doing business from ;)0 years while !8D were 8)@ years while more experienced were only " D

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.5 (rom 0here you purchase the productB


Response Ta,le/ 0holesaler C= Retail mall "

Pie Chart of Data Ta,le: From where to purchase

96

!"olesaler

#etail mall

,his 6uestion leads me to get the information that how many retailers buy the amul product i.e. milk, buttermilk, .aneer, curd, "assie from mall.. Eetailers were mainly buying milk product from wholesaler #(istributor$. <nly few were approaching Eetail mall because of attraction of scheme. ,here are several schemes in different mall like (iscount, price off, 4ifts on buying fixed amount things. >y asking this 6uestion came to know that C=D of Eetailers are buying amul product from distributor only and only "D were buying from mall which mainly includes tea stall owner.

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"5 Are you selling other ,rand productB


Response Ta,le/

)elling !0

&ot selling 80

Pie Chart of Data Ta,le/

5ot s lling

% lling

304

704

have included this 6uestion to know that retailers are selling other brand product or not and if they are selling then which brand product they are selling. %rom this 6uestion got information that mainly retailers are buying milk and buttermilk and some "assie from distributor while others are selling loose product which are home made like paneer and curd . >y asking this 6uestion came to know that 70D were not selling other brand product while C;L retailers were selling other brand product like 4ayatri dairy milk, while many were selling loose product.

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#5 Do retail mall affect your ,usinessB


&o Affect 1 to ! D ! to . D . to " D #D 3ess than 10 D Percentage C+ 1+ +; @ 11 1+ 100 2isited Retailers 11 1; @ 1 1 0 #0

12 16 32

8 20 12

$o %&&e't

1 to 2

2 to 3

3 to 4

Less t"an 10

have included this 6uestion to know that are retailers making profit or loss in amul milk made items business .%rom this 6uestion got information that mainly .!D retailers are not at all affected by mall while 1!D were very less affected and !0 D retailers were affected by +)C L and 11L retailers were affected by # D and 1! D retailers who were affected by less than1; L. So from this we can come to know that due to opening of mall retailers were very minutely affected.

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=5 @hich of this promote your ,usinessB +ive ran%


Response Ta,le/

+ift 10D

Price off 70D

(ree voucher 1!D

Travel trip 8D

Pie Chart of Data Ta,le/

Sales Promotion Tools %

8 12

10

70

(i&t

Pri'e o&&

)ree *ou'"er

+ra*el tri,

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have included this 6uestion to know that which marketing tools help retailers to increase sales of milk product. >y asking this 6uestion came to know that 70D prefer price off, 1!D retailers preferred %ree 2oucher Scheme while 10D retailers preferred 4ift scheme while only 8D retailers preferred ,ravel trip scheme.

75 Do season affect your ,usinessB


Response Ta,le/ :es C# D &o #D

Pie Chart of Data Ta,le/

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6s 54

5o

954

have asked this 6uestion to know that season affect retailers business or not. >y asking this 6uestion came to know C#D retailers was telling that there is seasonal affect in selling milk product. Mhile # D were not affected by season.

85 @hich media help to increase the sellB


Response Ta,le/ Hoardings Eios% =. 7 Handout " &e0spaper T52 1. 1.

Pie Chart of Data Ta,le/

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Percentage
(oar*ings 7ios0 134 (an*out 5 )s$a$ r +!v

134

44 634 74

have asked this 6uestion to know that season affect retailers business or not. >y asking this 6uestion came to know C#D retailers was telling that there is seasonal affect in selling milk product. Mhile # D were not affected by season.

(uring this summer internship have find out some difficulties for the marketing activity of 4C!!% and operating activity of !other (airy, 4andhinagar. n this pro5ect report have tried to give better suggestion of my findings. *very organization facing different types of difficulties in its operational activities, either the organization is production related or service related or sales related.

(indings/

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,he ma5or finding have noted down that 'mul Eetailers have many complain about dumping and leakage problem.

,he distributors or dealers of 'mul are not interested to sell 'mul "assie. ,hey want more commission on selling of 'mul "assie.

,he 6uantity of damaged pouch is higher. Some times distributors force fully give product like lassie to sell to retailers. ,here were many complaints about amul ice cream and some retailers have changed to havmor ice cream.

'mul .arlors and distributors sometimes do not provide 1;;ml plastic glass with a pouch of 'mul .ro)life .robiotic "assie.

!any consumers have complaint about spoiled 'mul "assie or some sale expired date product.

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Suggestions:
<n the base of finding, 'mul distributor should avoid dumping and pouches should be packed nicely and handled carefully while loading. 'mul should give more commission to the distributors and retailers so that they can be attracted to sell more. Company should reduce the damaged pouch 6uantity to save the cost. So that commission or other benefits can be given to the distributors and retailers. 's distributor want to reduce loss so they forcefully give it to retailers which should be stopped. 's ice cream of amul was coming loose so customers were complaining so ice cream 6uality should be improved. 'mul parlors and other distributor should provide all promotional schemes to retailers so customers will be attracted. *xpired date product should not be sold by retailers or any amul parlor to maintain customers. 'mul should include some pictures showing health benefits in its advertisement at the kiosks.

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('R RETA 3ER) D4E T' 'PE& &+ '( RETA 3 $A33

AD2A&TA+E)/
!ain advantage to Eetailers is that they get .rice <ff and (iscount on many milk made items. 'll retail mall provide bonus point card scheme which attract many retailers. Eeliance fresh mall provide Eeliance one card in which when we purchase Es 1;; item we get one >onus point and when we get 1;; points than they give us gift which may be in form of discount coupon or gift voucher or gift. 'fter 1 pm reliance fresh mall give Es. 1 off on 8;; ml milk pouches so some retailers buy milk from there to earn more margin. !ore malls provide Club !ore Card in which we get 1 bonus point at purchase of Es. 1; item and at 8;; point they provide surprise gift. Mhile other malls like )PE&CER and &D A -433) have no bonus card system but these malls provide different price cut off and discount.

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D )AD2A&TA+E)/
,here is loss in profit to retailers due to opening of mall in 4andhinagar and 'hmedabad. !any customers prefer malls to buy many daily need items. Mhen customers go to buy things to mall they buy many other daily re6uired things which again affect retailers of amul. !any Schemes attract customers towards mall. Schemes like .rice off, discount coupon, gift voucher etc. ,here are many sales promotion schemes and offer many customers are attracted to mall and thus retailers have to face some loss.

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Mhile preparing the pro5ects, came across certain limitations that are mentioned below

*mployee of the organization doesn/t have authority to give all the details about some confidential matters. So (ata of 'mul products. have restricted my self to publicized information like Sales

,he information provided by the respondents in market survey is based on their memory recall which may be again affected by respondent/s own perceptions.

,o know about total marketing activity of 4u5arat Co)operative !ilk !arketing %ederation is impossible in the short time period.

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