Amul's Diversification Strategy
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Case Details:
Case Code : MKTG014
Case Length : 7 Pages
Period : 1996-2001
Pub Date : 2001
Teaching Note : Available
Organization : Gujarat Cooperative Milk Marketing Federation
Industry : Food, Beverages & Tobacco
Countries : India
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This case study was compiled from published sources, and is intended to be used as a basis for class discussion. It is not intended to illustrate either effective or ineffective handling of a management situation. Nor is it a primary information source.
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Excerpts
Background
In 1996, B M Vyas, Managing Director, GCMMF, commissioned the Indian Market Research Bureau (IMRB) to conduct a consumer survey to identify the products consumers wanted from Amul. Based on the findings, Amul entered into the following areas: ice cream, curd, paneer, cheese, and condensed milk. (Refer Exhibit II for Amul's product portfolio).
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In 1997, Amul launched ice creams after Hindustan Lever acquired Kwality, Milkfood and Dollops. Positioned as the 'Real Ice-cream,'Amul Ice cream was one of the few milk-based ice creams in the market. With GCMMF gradually expanding its distribution reach, Amul was all set to strengthen its share in the ice cream segment. (Refer Exhibit III for market share).
In August 1999, Amul launched branded yoghurt in India for the first time, when it test marketed “Masti Dahi” in Ahmedabad first and then introduced it all over the country. “Masti Dahi” was plain yoghurt sold in plastic cups. Each 400 gm cup was priced at Rs 12...
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Why Diversify?
With the liberalization of the Indian economy in the early 1990s, and the subsequent entry of new players, there was a change in lifestyles and the food tastes of people. The new team that took over the management of the GCMMF in the mid-1990s hoped to take advantage of the change. The management adopted Total Quality Management (TQM)
and set for itself higher benchmarks (in terms of growth).
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They also diversified the Amul portfolio, offering a range of food stuffs such as ketchup, jam, ice-cream, confectionaries, cheese, and shrikhand.
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... |
Exhibits
Exhibit I: Pizza Price Comparison
Exhibit II: Amul's Product Portfolio
Exhibit III: Market Share in Percentage (1999)
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