amul sip report

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1 | P a g e

A REPORT

ON

Exploring Opportunities for Amul Fresh

Paneer in Anand and Vadodara City andalso along NH8 Between Ahmedabad and

Vadodara

By:-

Abhishek Sharda

10BSPHH010020

IBS Hyderabad


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A REPORT

ON

Exploring Opportunities for Amul Fresh Paneer in Anand andVadodara City and also along NH8 Between Ahmedabad and

Vadodara

Submitted By:

Sharda Abhishek Hanumandas

Enrolment no. 10BSPHH010020

Organization: Kaira District Co-operative Milk Producers Union Ltd.

(Amul Dairy)

A report submitted in part fulfillment of the requirements of

MBA program of IBS Hyderabad.

Distribution list:

Prof. D Sreenivasa Chary Dr. Gopal Shukla

Faculty Guide Sr Executive (Sales & Mktg)

IBS Hyderabad Amul Dairy

Date of submission: 15th

April 2011


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AUTHORIZATION

This is to certify that this is a bonafide project report submitted in partial fulfillment of therequirements of MBA program of IBS.

This Report document titled Exploring opportunities for Amul Fresh Paneer in Anand and

Vadodara City and also along the NH8 between Ahmedabad and Vadodara is a submission

work done by Abhishek Sharda.

This report has been formally submitted to Prof. D Sreenivasa Chary, Faculty, IBS Hyderabad.

This report has been verified and authenticated by

Prof. D Sreenivasa Chary

Faculty Guide

IBS, Hyderabad


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ACKNOWLEDGEMENT

Let me begin by stating that undertaking this project was a great Learning experience and

an academic stimulation for me. I certainly encountered difficulties at various stages of

execution. Nonetheless, the sense of challenge and accomplishment that filled me after

overcoming all the overwhelming odds is inexplicable in words.

The unending guidance, motivation and co-operation that I received from various

quarters are truly the factors that kept me going. With deep sense of Gratitude, I hereby take this

opportunity to render my most sincere and heartiest thanks to all the people who helped me

realize this project.

First and foremost I would like to extend my gratitude to Mr. Rahul Kumar Srivastava,

MD, Kaira District Co-operative Milk Producers Union Ltd. for providing me this excellent

opportunity of working with the company and helping me gain the necessary Industrial exposure

required for my MBA program at IBS, Hyderabad.

I am greatly indebted to my Company Guide Dr Gopal G Shukla, Sr executive (Sales

& Marketing) Kaira District Co-operative Milk Producers Union Ltd for giving me the

opportunity to work on the project titled- Exploring opportunities for Amul Fresh Paneer in

Anand and Vadodara City and also along the NH8 between Ahmedabad and Vadodara and

sparing his valuable time for this project and guiding me throughout the entire duration it lasted.He literally inundated me with study material and was ever so receptive to my queries and

doubts.

Most of all, I extend my heartfelt thanks to our Faculty Guide, Prof. D Sreenivasa

Chary, of IBS Hyderabad whose suggestions and constructive critics have been invaluable

assets all throughout. I am overwhelmed by his level of involvement in my project and shall

always be grateful to him for the same. His wisdom and commitment have been a great source of

inspiration. Needless to say, had it not been for him, we wouldnt now be cherishing this exalted

goal. He has shown us the way to pursue excellence.

I would also like to thankMr. Sanyam Pandya (Sr Sales and Marketing officer, Amul

Dairy), Mr Madhubhai (Mohini Traders) and Mr. Nilesh Patel for supporting me and guiding

me during the various phases of this project.


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And, last but not the least; let me not forget to thank all the Faculty of IBS Hyderabad

who taught me during the first year and other staff members of Amul Dairy for encouraging

and keeping my spirits high during the entire course of this project.

Abhishek Sharda

IBS Hyderabad


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ABSTRACT

Paneer is the largest dairy product sold in terms of volume after liquid milk. This market has

been estimated to be worth ` 10000 crores in both organized and unorganized sectors. But this

market is highly dominated by the unorganized sector while the organized sector constitutes only

1% of the market. Amul being one of the largest Co-operative dairy has forayed into Fresh

Paneer market since November 2007. But due to constant increase in prices of milk and high

inflation, Amul has not been able to capture its targeted market share in this industry.

The main objective of this project is to study the current market scenario and increase the sales

of Fresh Paneer by creating appropriate promotion schemes.

Firstly in order to study the current market scenario, an exploratory survey has been conducted in

Anand and Vadodara city and along the NH8 between Ahmedabad and Vadodara. During this

survey, answers to questions like the Market Share, Major Competitors, their Pricing and

Promotion Strategies were found out.

In the Next Step, market research was conducted on institutional buyers like Hotels and Caterers

by means of a questionnaire. The objective of this research was to find out the factors that affect

the buying behavior of these customers while buying Fresh Paneer from the market. Factor

Analysis was done using SPSS tool and variables like shelf life, quality, price, brand, supply

services etc. were grouped into 3 factors.

Depending upon the results of factor analysis, appropriate recommendations were made to the

company to concentrate first on the Basic Expectations like price, packaging, promotion schemesetc. Next the company should concentrate on Quality to improve the Brand Image and finally on

Supply services that are provided to the customer.

Another recommendation was to leave out the retailers for supply of Fresh Paneer because their

demand is variable. Also the shelf life of the product is less, and we dont provide facility of

replacement, it would be a burden on the retailers who will not be able to sell the product on

time.

There were some complaints regarding quality and supply of Fresh Paneer. These were resolved

by doing competitors analysis and making necessary changes in the product. The problem

regarding supply was solved by dividing the entire network among three distributors of the

company. Finally samples were given to the customers for trial purpose and orders were taken.

At the end of the internship, the expected market share to be captured by Amul Fresh Paneer is

47%.


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OVERVIEW

Dairy Industry in India:-

India is the worlds largest milk producer, accounting for more than 13% of the worlds totalmilk production. It is the worlds largest consumer of dairy products, consuming almost 100% of

its own milk production. Dairy products are a major source of cheap and nutritious food to

millions of people in India and the only acceptable source of animal protein for large vegetarian

segment of Indian population, particularly among the landless, small and marginal farmers and

women.

Dairying has been considered as one of the activities aimed at alleviating the poverty and

unemployment especially in the rural areas in the rain-fed and drought-prone regions. In India,

about three-fourth of the population live in rural areas and about 38% of them are poor. In 1986-

1987, 73% of rural households owned livestock. Small and marginal farmers account for threequarters of these households owning livestock, raising 56% of the bovine and 66% of the sheep

population. According to the National Sample Survey of 1993-94, livestock sector produces

regular employment to about 9.8 million persons in principal status and 8.6 million in subsidiary

status, which constitutes about 5% of the total work force. The progress in this sector will result

in a more balanced development of the rural economy.

AMUL and Operation Flood:-

AMUL means " pri celess"in Sanskrit. The brand name "Amul," from the Sanskrit "Amoolya,"

was suggested by a quality control expert in Anand. Amul products have been in use in millions

of homes since 1946. Amul Butter, Amul Milk Powder, Amul Ghee, Amulspray, Amul Cheese,

Amul Chocolates, Amul Shrikhand, Amul Ice cream, Nutramul, Amul Milk and Amulya have

made Amul a leading food brand in India. Currently Unions making up GCMMF have

2.9 million producer members with milk collection average of 9.10 million litres per day.

(Turnover: Rs. 80.05 billion in 2009-10). Today Amul is a symbol of many things like

1) High-quality products at reasonable prices.

2) The genesis of a vast co-operative network.3) The triumph of indigenous technology.

4) The marketing savvy of a farmers' organisation.

5) A proven model for dairy development.


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Amul based in Anand, Gujarat has been an example of a co-operative organization's success in

the long term. The Amul Model has established itself as a uniquely appropriate model for rural

development.

The Amul Model is a three-tier cooperative structure. This structure consists of a Dairy

Cooperative Society at the village level affiliated to a Milk Union at the District level which in

turn is further federated into a Milk Federation at the State level. The above three-tier structure

was set-up in order to delegate the various functions; milk collection is done at the Village Dairy

Society, Milk Procurement & Processing at the District Milk Union and Milk & Milk Products

Marketing at the State Milk Federation. This helps in eliminating not only internal competition

but also ensuring that economies of scale are achieved. As the above structure was first evolved

at Amul in Gujarat and thereafter replicated all over the country under the Operation Flood

Programme, it is known as the Amul Model or Anand Pattern of Dairy Cooperatives.

The dairy industry in India and particularly in the State of Gujarat looks very different today.

India has emerged as the largest milk producing country in the World. Gujarat has emerged as

the most successful State in terms of milk and milk product production through its cooperative

dairy movement. The Kaira District Cooperative Milk Producers Union Limited, Anand

has become the focal point of dairy development in the entire region and AMUL has emerged as

one of the most recognized brands in India, ahead of many international brands.

As an impact of the Amul Pattern it has been proved that an investment of Rs. 20 billion over

20 years under Operation Flood Programme in 70s & 80s has contributed in increase of Indias

milk production by 40 Million Metric Tonne (MMT) i.e. from about 20 MMT in pre- Operation

Flood period to more than 60 MMT at the end of Operation flood Programme. Thus, an

incremental return of` 400 billion annually have been generated by an investment of` 20 billion

over a period of 20 years. This has been the most beneficial project funded by the World Bank

anywhere in the World. One can continue to see the effect of these efforts as Indias milk

production continues to increase and now stands at 90 MMT. Despite this fourfold increase in

milk production, there has not been drop in the prices of milk during the period and has

continued to grow.

Due to this movement, the countrys milk production tripled between the years 1971 to 1996.Similarly, the per capita milk consumption doubled from 111 gms per day in 1973 to 222 gms

per day in 2000. Thus, these cooperatives have not just been instrumental in economic

development of the rural society of India but it also has provided vital ingredient for improving

health & nutritional requirement of the Indian society. Very few industries of India have such

parallels of development encompassing such a large population.


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AMUL BCG MATRIX

Each product has its product life cycle and each stage in product's life-cycle represents a

different profile of risk and return. In general, a company should maintain a balanced portfolio of

products. Having a balanced product portfolio includes both high-growth products as well as low-growth products. A high-growth product is for example a new one that we are trying to get to

some market. It takes some effort and resources to market it, to build distribution channels, and

to build sales infrastructure, but it is a product that is expected to bring the gold in the future. On

the other hand, a low-growth product is for example an established product known by themarket. Characteristics of this product do not change much, customers know what they are

getting, and the price does not change much either. This product has only limited budget for

marketing. This is the milking cow that brings in the constant flow of cash.


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The BCG matrix helps us to find out what phase our product is in and how do we classify what

we sell. It also helps us to assign the priorities in terms of promotion to the different products.

Placing products in a BCG matrix results in 4 categories in product portfolio of a company:

Stars (High Market Share, High Growth)

Stars are units with a high market share in a fast-growing industry. The hope is

that stars become the next cash cows. Sustaining the business unit's market leadership may

require extra cash, but this is worthwhile if that's what it takes for the unit to remain a leader.When growth slows, stars become cash cows if they have been able to maintain their

category leadership. For Amul, the following products are in the Star category:-

o Amulya Milk powdero Amul Ice-creamo Amul Shrikhando Amul Frozen Paneero Amul Fresh Creamo Amul Kool (flavoured milk)

Question Marks (Low Market Share, High Growth)

Question marks (also known as problem child) are growing rapidly and thusconsume large amounts of cash, but because they have low market shares they do not

generate much cash. The result is a large net cash consumption. A question mark has the

potential to gain market share and become a star, and eventually a cash cow when the market

growth slows. If the question mark does not succeed in becoming the market leader, thenafter perhaps years of cash consumption it will degenerate into a dog when the market

growth declines. Question marks must be analyzed carefully in order to determine whether

they are worth the investment required to grow market share. For Amul, the products in thiscategory are:-

o Amul Frozen Pizzao Amul Chocolateso Amul Mithaimate


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Dogs (Low Market Share, Low Growth)

Dogs, or more charitably called pets, are units with low market share in a mature,

slow-growing industry. These units typically "break even", generating barely enough cash tomaintain the business's market share. Though owning a break-even unit provides the social

benefit of providing jobs and possible synergies that assist other business units, from anaccounting point of view such a unit is worthless, not generating cash for the company. Theydepress a profitable company's return on assets ratio, used by many investors to judge how

well a company is being managed. Dogs, it is thought, should be sold off. For Amul, the

product in this category is:-

o Amul Flaavyo yoghurt

Cash Cows (High Market Share, Low Growth)

Cash cows are units with high market share in a slow-growing industry. These unitstypically generate cash in excess of the amount of cash needed to maintain the business. They

are regarded as staid and boring, in a "mature" market, and every corporation would bethrilled to own as many as possible. They are to be "milked" continuously with as little

investment as possible, since such investment would be wasted in an industry with low

growth. For Amul, the products in this category are:-

o Amul Buttero Amul Pure Gheeo Amul Processed Cheeseo Amul Pasteurized Milk


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INTRODUCTION

Purpose of the Report:-

The main Purpose of this report is to explore opportunities for Amul Fresh

Paneer in Anand and Vadodara city and also along NH8 between Ahmedabad and

Vadodara.

Scope of the Report:-

The report mentions about the work done during the Summer Internship

Program at KAIRA District Co-operative Milk Producers Union Ltd. also known as

Amul Dairy.

The report covers the work done during the internship program in three

phases.

1. Conducting an exploratory survey in and around Anand and Vadodara city

and also along the NH8 between Ahmedabad and Vadodara.

2. Finding out prospects by analysis of a questionnaire.

3. Creating a new distribution network and getting new institutions by

marketing the product in the above stated area.


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Methodology and Data collection:-

Phase1:- Exploratory Survey

Methodology:- In this phase an exploratory survey was conducted

in and around Anand and Vadodara city and also along the NH8

between Ahmedabad and Vadodara.

It was done by surveying the area and making a database

that contained a list of Restaurants, Caterers, Retailers etc.

Data Collection:- During this phase, the following data was

collected from the various people:

Current brand of Paneer they use

The current price at which they buy Paneer

The current demand of the firm

Phase2:- Finding out prospects by analysis of questionnaire

Methodology:- In this phase a survey was conducted on people to

find out their buying behavior while purchasing Paneer.

Factor analysis was done on the data collected by means of

SPSS tool.

Analysis of data indicated the factors that affect the

peoples buying behavior while purchasing Paneer from the

market.

As per the result of factor analysis, appropriate factors

would be targeted during the third phase to increase the

sales of Fresh Paneer.


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Data collection:- Primary data was collected by means of a

questionnaire.

Variables like price, shelf life, promotion schemes,

packaging, quality, brand, supply services were identified

by means of a sample questionnaire and conducting focus

group interviews.

Primary data was collected on the above variables by

circulating the questionnaire.

Phase3:- Creating a New Distribution Network

Methodology:- In this final Phase of the project, as the factors that

affect the peoples buying behavior of Paneer are already known,

we will be concentrating on those factors more importantly in

order to convert prospects into our potential customers.

Meetings with the prospects will take place in presence of

the distributor and deals will be finalized.

Also the needs of the customer will be asked about the

supply services required etc.


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Limitations:-

NH8 being a part of my route, it was a difficult task to cover the stretch of

around 100 kms on a bike that too in hot summer of Gujarat.

Since it is a market research project many respondent errors like non

response error, refusal, response bias etc. were also faced.

During the study of the first phase, it was found that the market was

dominated by local players; hence it will be a difficult task to break this

clutter.

As per the survey conducted, it was found that Amul Paneer had some

quality issues, i.e. it didnt fulfill the consumers needs.

Also Paneer being a perishable item, logistics is a matter of concern as the

product needs to be kept in refrigerated environment, the cost increases.


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Phase I: Exploratory Survey

An Exploratory survey was first conducted in and around the cities of Anand and Vadodara and

also along the NH8 between Ahmedabad and Vadodara. The main purpose of this survey was to

create a database which contains important information like the list of Hotels, Caterers and other

bulk buyers of Paneer, their owners, contact information, the current brand of paneer they use, at

what price they buy Paneer and the daily demand of Fresh Paneer. This database would be of

high importance to the company as they can use this information to target these consumers for

other products they introduce at later stages. Also from this database, we would be targeting the

prospects with proper promotional schemes in the later phases.

The current market scenario of Fresh Paneer Market in Anand, Vadodara and NH8 between

Ahmedabad and Vadodara is shown below:

It was also found that the current demand of Restaurants in cities was around 5 kg a day while

that on highways was around 2-3 kg a day. Also the demand for caterers was variable according

to the party seasons.

Moreover the retailers preferred frozen paneer over fresh paneer because the shelf life of fresh

paneer was around 6-8 days while that of frozen paneer was around 180 days. Since the demand

from retailers is variable, it wasnt a good idea to market the product to retailers.

Another observation was about the pricing of the paneer. The pricing of fresh paneer was

variable between ` 135 per kg to ` 200 per kg in the unorganized sector.

Some of the information collected is as follows

local

67%

Amul

20%

Sugam

13%

Market Share in Surveyed Area


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Demand:- Variable from 25-50 Kgs

Current Rate:- Rs. 175/kg

Current Brand:- Amul

Complaint:- No Replacement, Supply Issues

Demand:- 5 kg/day


Current Brand:- Local

Complaint:- Constant rising prices

Demand:- 7 kg/dayCurrent Rate:- Rs. 170/kg


Complaint:- nil

Demand:- 6 kg/ day


Current Brand:- Sugam

Complaint:- None

Demand:- 7-8 kg / day



Complaint:- Supply Issues

Demand:- 4-5 kg / day (12 Kg on weekends)

Current Rate:- Makes own paneer

Current Brand:- Own Paneer



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To understand the market in a better way, we did the porters five force analysis.

Demand:- 4-5 kg / day (variable with party orders)



Complaint:- None

Demand:- 14 kgs/ Day

Current Rate:- Rs. 200 /kg


Complaint:- None

Demand:- 8-10 kgs / day


Current Brand:- local + Amul


Demand:- 8 kgs / day




Demand:- 2-3 Kgs /day (Variable with party orders)



Complaint:- None

Demand:- 10 kgs / day





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PORTERS FIVE FORCE ANALYSIS OF PANEER MARKET

BARRIER OF NEW ENTRY

High capital investment

required in initial years.

Legal Barriers as it is a

processed food industry.

Intense competition from the

unorganized sector.

Economies of scale (high for

Amul) but very difficult for

new players to achieve.

BARRIER TO THE ENTRY IS

HIGH

DEGREE OF RIVALARY

Large number of players

from the unorganized

sector.

High Exit Barriers Due to

high investment made for

mass production of fresh

paneer.

Highly price sensitive.

DEGREE OF RIVALARY IS

HIGH

BARGAINING POWER OF SUPPLIER

It is Prone to Seasonal

Fluctuations.

Also Amul having a

cooperative network of

suppliers, this is not an issue

for Amul.

BARGAINING POWER OF

THE SUPPLIER IS LOW.


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Phase II:- Questionnaire Survey

As we observed above that due to high inflation and constant rise in prices of milk, the price of

Paneer also kept on increasing which resulted in loss of market for Amul Fresh Paneer. The local

dairies were also affected but not to that extent.

In order to find out the exact scenario of the market, I decided to conduct a questionnaire survey

to find out the buying behavior of consumers while buying fresh Paneer from the market.

OBJECTIVE OF STUDY

The objective of my study through this project is to determine the factors which have a bearing

on consumers buying behavior ofFresh Paneer. The results obtained from this study will give us

an insight into consumer behavior which, in turn, will help me in analyzing the factors

contributing to brand preferences.

RESEARCH QUESTION

To analyze the consumers buying behavior ofFresh Paneer.

METHODOLOGY

I used factor analysis to identify the factors that influence the buying behavior of the consumers.


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FACTOR ANALYSIS

Factor analysis as done through SPSS 13.0 for Windows, gives us a detailed insight regarding

the data that we have and its effects/results, etc, on the study. With factor analysis we would be

able to adjudge our results much accurately and would be able to take decisions efficiently. Ithelps to group the variables together that have some similarity into a factor giving the general

idea about all the variables in it. This helps us to know which factor to work on for improving the

performance of the organization. It also helps us to include any new variables that emerge

according to their similarity with the others in the group. Not only does factor analysis help in

interpreting questionnaires, it also helps in formulation of better questionnaires after careful

study of the variables intended for implementation in the questionnaire and the factors generated

thereof. In this study we run the factor analysis for the data obtained through questionnaires and

we look forward to find convincing patterns/results from the same through interpretation of the

various analysis tools obtained from the factor analysis output.

The Variables that we have chosen are:

Price

Packaging

Quality

Brand

Supply Services

Shelf Life Promotion Schemes

Daily Demand

As the number of factors influencing buying behavior is large, factor analysis would aid us in

determining the most influential factors and we will be able to group the variables into factors.


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CORRELATION MATRIX

The correlation matrix gives the correlation coefficients between one variable and every other

variable. It shows the extent to which each variable can have some similarity to others if any. If

there is significant correlation between any two variables, we may choose to drop one of them asa variable and simplify further analysis of our data. This is done because both the variables give

the same information and hence result in redundancy. Typically a correlation of 0.9 is

considered to be high. If the correlation is low then also we can drop the variables as they dont

provide us with much information and can be dropped.

In our output the maximum correlation we are getting is between variables Brand and Quality

which is 0.718 which is high enough. But still it is not formidable to consider reducing one of the

variables of the two, as correlation value is less than 0.8. On the other hand it also shows that the

variables chosen for our questionnaire are discrete with minimum or no redundancy. A very low

correlation between the variables thus shows that the questions that were asked in ourquestionnaire are apt and they convey the correct, discrete message as far their proposition is

concerned. Therefore we assume that our data is free from singularity. The value of the

determinant is 0.016 which is greater than the necessary value of 0.00001; hence multi-

collinearity is not a problem.


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KMO & BARTLETTS TEST

Our analysis shows us a KMO statistic of 0.669. It signifies that our data size is adequate enough

for factor analysis with respect to the number of variables selected. A KMO value greater than

0.8 is normally considered great for factor analysis, but since our endeavor regarding finding out

the buying behavior of Fresh Paneer depends upon the questions that were asked and assessed

for, we infer that though the data seem to be unfit for a perfect factor analysis, it would definitely

help us in zeroing into relevant factors that govern the analysis.

Bartletts measure tests the null hypothesis that the original correlation matrix is an identity

matrix. For factor analysis to work we need some relationships between variables and if the R-

matrix were an identity matrix then all correlation coefficients would be zero. Therefore we want

this test to be significant (to have a significant value less than 0.05).A significant test tells us that

R-matrix is not an identity matrix; therefore, there are some relationships between the variables

we hope to include in the analysis. For this data, Bartletts test is highly significant (p


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COMMUNALITIES

Component analysis works on the assumption that all variance is common, therefore, before

extraction the communalities are all 1. The extraction reflects the common variance in the data

structure. For example we can say that 66.1% of the variance associated with price is common

or shared variance. Another way to look at the communalities is in terms of the proportion of

variance explained by the underlying factors. It gives the extent to which the variance has been

accounted for by the extracted factors.

Communalities

Initial Extraction

Business 1.000 0.652Price 1.000 0.661

Packaging 1.000 0.831

Quality 1.000 0.848

Brand 1.000 0.790

Supply Services 1.000 0.692

Shelf Life 1.000 0.765

Promotion Schemes 1.000 0.757

Daily Demand 1.000 0.586

Extraction Method: Principal Component Analysis.


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TOTAL VARIANCE EXPLAINED

Our output lists the eigen values associated with each linear component after extraction and after

rotation. Before extraction SPSS has identified 9 components within the data set as we know that

at first SPSS will show us as many components (factors) as the number of variables. The eigenvalues associated with each factor represent the variance explained by that particular linear

component. On the other hand it explains the extent of coverage of the critical factors included in

the analysis. The first factor has the highest significance as it explains 36.353% of the total

variance.

Total Variance Explained

Component

Initial EigenvaluesExtraction Sums of Squared

LoadingsRotation Sums of Squared

Loadings

Total% of

VarianceCumulative

% Total% of

VarianceCumulative

% Total% of

VarianceCumulative

%

1 3.272 36.353 36.353 3.272 36.353 36.353 2.870 31.885 31.885

2 2.047 22.747 59.100 2.047 22.747 59.100 1.929 21.434 53.318

3 1.263 14.035 73.135 1.263 14.035 73.135 1.784 19.817 73.135

4 0.710 7.891 81.026

5 0.653 7.260 88.286

6 0.381 4.235 92.521

7 0.302 3.354 95.875

8 0.193 2.145 98.020

9 0.178 1.980 100.000


Since we are extracting factors with Eigen values greater than 1, we get 3 components (factors)

as our final factors. If we extract factors with Eigen values less than 1 then we will get factors

which are less significant and explanatory than the variables themselves. After extraction we take

up the 3 factors thus generated and discard the others. We cannot simply jump to results without

the rotation. With rotation we try to optimize the factor structure and hence equalize the relative

importance of all the factors with respect to the final output.


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COMPONENT MATRIX

It contains the loadings of each variable onto the factors generated. It shows us the variables that

have been best explained by the respective components. This matrix only shows the relative

extraction of the variables into the components thus obtained. It is therefore not an useful tool foranalysis but shows us the data required for further interpretation regarding the strength of the

components. From our output we can see that the extraction values for component 1 is maximum

compared to others and thus it explains the maximum variance. We cannot jump to the result

about the various factors just by this matrix. A clearer picture is provided by the rotated

component matrix.

Component Matrix(a)

Component

1 2 3

Business -0.151 0.686 0.397

Price 0.312 0.546 -0.516

Packaging 0.796 0.421 0.141

Quality 0.708 -0.411 0.421

Brand 0.596 -0.453 0.479

Supply Services 0.519 -0.330 -0.560

Shelf Life 0.848 0.191 -0.092Promotion Schemes 0.814 0.291 -0.096

Daily Demand -0.097 0.704 0.285


a. 3 components extracted.


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ROTATED COMPONENT MATRIX

This matrix contains the same information as that explained by the COMPONENT MATRIX

earlier above, except for the fact that this matrix shows us the result after rotation. Rotation

maximizes the loadings of a variable in one particular factor while minimizing the loadings in allother factors. ROTATED COMPONENT MATRIX is used to interpret the loading of variables

onto the respective factor that explains it in the best possible way

Rotated Component Matrix(a)

Component

1 2 3

Business 0.090 -0.118 0.794

Price 0.652 -0.485 0.008

Packaging 0.833 0.288 0.232Quality 0.297 0.851 -0.187

Brand 0.168 0.859 -0.156

Supply Services 0.430 0.008 -0.712

Shelf Life 0.830 0.256 -0.098

Promotion Schemes 0.850 0.188 -0.019

Daily Demand 0.173 -0.182 0.723

Extraction Method: Principal Component Analysis.Rotation Method: Varimax with Kaiser Normalization.

a. Rotation converged in 6 iterations.

There are 3 factors and the variables load highly onto only one factor. The result of our output

regarding the same can be interpreted as follows:

The first factor consists of Price, Packaging, Shelf Life and Promotion Schemes.

The second factor consists of Quality and Brand.

The third factor consists of Business/occupation and Supply Services.


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Page 33

COMPONENT TRANSFORMATION MATRIX

It shows the relation between the factors before and after rotation. It is a measure of how much

the factors have changed or how much they have remained the same. If the correlation is above

0.5, it shows that the concerned factor has more or less remained the same after rotation. But ifthe correlation is negative or below 0.5, it shows that the factors have changed considerably after

rotation. Not only does it show the variation in one particular factor, it can also be used to see the

correlation between the factors too.

Component Transformation Matrix

Component 1 2 3

1 0.845 0.490 -0.213

2 0.467 -0.484 0.740

3 -0.259 0.725 0.638Extraction Method: Principal Component Analysis.Rotation Method: Varimax with Kaiser Normalization.

From our output it is evident that Factors have changed considerably as correlation between

component 1 & 3 is -0.259, between 1 & 2 is 0.467. But for some components the correlation is

>0.5 so it remains the same.


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Page 34

COMPONENT SCORE COEFFICIENT MATRIX

This matrix shows the coefficients of the variables in the equation that is made for all the factors

when the factor analysis is done. These values are used to calculate the factor value for each of

the individual sample.

Component Score Coefficient Matrix

Component

1 2 3

Business 0.036 0.043 0.459

Price 0.311 -0.378 -0.084

Packaging 0.273 0.100 0.172

Quality 0.003 0.445 0.018

Brand -0.048 0.472 0.040

Supply Services 0.174 -0.166 -0.436

Shelf Life 0.282 0.029 -0.033

Promotion Schemes 0.297 -0.002 0.004

Daily Demand 0.077 -0.018 0.405

Extraction Method: Principal Component Analysis.Rotation Method: Varimax with Kaiser Normalization.


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FINDINGS AND CONCLUSION OF FACTOR ANALYSIS

From the above analytical figures we have come to reduce our data comprising of 9 variables

into broadly 3 factors. The factors or the components thus obtained from our analysis contain oneor the other variables in them. With this outcome we would be able to group all the variables

under consideration into discrete factors.

The first factor consists of Price, Packaging, Shelf Life and Promotion Schemes.

The second factor consists of Quality and Brand.

The third factor consists of Business/occupation, Daily Demand and Supply Services.

So now we can concentrate on the broader terms rather than individually focusing on the

variables. This can be of great help to better understand the consumer buying behavior of Fresh

Paneer.


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Page 36

RECCOMENDATIONS ON THE BASIS OF PHASE I & II

The company should only focus on selling the Fresh Paneer to Restaurants and Caterers i.e. the

institutional buyers. Retailers should not be considered for selling Fresh Paneer because thedemand is very uncertain for the retailers. Also the shelf life of the product is less (about 6 to 8

days), and we dont provide facility of replacement , it will be a burden on the retailers who will

not be able to sell the product on time.

Also our findings give us the following 3 factors affecting the consumer buying behavior of

laptops in India.

1. Basic Expectation: Price, Packaging, Shelf Life and Promotion Schemes.

2. Brand Image: Quality and Brand.

3. Operational Factor: Business/occupation and Supply Services.

The company needs to focus on these 3 factors in order to make the product run successfully in

the market. The company needs to focus on Basic Expectationthe most as it was the 1st

factor

that emerged out. This is considered most important by the survey respondents. In order to give

initial boost to sales, the company should try to match the price that prevails in the current

market and also come up with different unique promotion schemes. As it is said that first

impression is the last impression, the packaging should be made attractive so that the customers

are pulled towards it. Also it was seen that shelf life plays an important role in this factor, hence

appropriate action should be taken for this.

Then the next focus should be on improving the Brand Imageby improving the quality. While

the initial survey was being conducted, it was seen that Amul Fresh Paneer did not stand at par

with competitors quality. The same was reported to the plant and hence some tests on the

competitors product are currently being conducted.

The 3rd

factor is Operational factorwhich means that since our target prospects are Bulk buyers

like caterers and restaurants, regular and timely supply services should be available. Hence the

company needs to build a strong supply network for Fresh Paneer.


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Page 37

PHASE III: Creating a new distribution network

During the Exploratory Survey (PHASE I) different were issues raised by the customers

regarding Amul Paneer:-

1. Some believed that the Paneer was very hard and could not be used as per desire

2. Paneer was brittle i.e. it broke into small pieces while grating it

3. There was problem with the surface finishing of the paneer.

4. There were problems with supply of Paneer

5. Some had problems with the No Replacement Policy of Amul

6. Some had issues that their complaints were not heard by the Dairy Personal

Hence it was important to resolve these problems before we go into the market and sell the

product.

So first we decided to study the paneer manufacturing process of Local dairy and compare it with

the manufacturing process of Amul Fresh Paneer. This is to be done because the market is highly

dominated by local players. So in order to understand where our product lags behind, we do this

comparison.


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PANEER MANUFACTURING PROCESS OF LOCAL DAIRIES

The Paneer manufacturing process of Local dairies is simple. No hitech machines are used in the

process.

The milk got is stored in crates first at a cool temperature. Then the milk is heated at 180C for 2

to 3 hours. This is dont to get more solid part from the milk. This milk is then treated with

lemon juice or lemon flower water in the milk reactor. This is done to convert the milk into solid

particles. After this process, the semisolid mass is taken to filter press where the solid is

seperated from the whey and then this solidpart is pressed by heavy machines to convert it into

Paneer. After the pressing is done the product is cooled down and stored in a cool place.

Each process is completely handeled under supervision of a person. Hence the manpower

required for this type of manufacturing is more. Also the capacity of production is less as

compared to Amul.


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Page 39

PANEER MANUFACTURING PROCESS OF AMUL DAIRY

The Paneer manufacturing process of Amul is fully automatic. Amul has machinery imported

from Denmark which handles the entire process of manufacturing of Paneer.

Firstly the Milk brought in from different villages is stored in the milk storage tank (milk silos).

From the milk silos, the milk is brought to the pasteurizer where it is heated at 90C to get more

solid part from the milk. After pasteurization, the milk is taken to the coagulation tank and is

treated with 1% citric acid for 5 minutes at 70C. The capacity of the coagulation tank is 10000Kg but it is only half filled so that there is more space to churn the milk in the tank. After that the

milk is taken to a cooling tank where the solid particles are allowed to settle down. At this point

of time, the milk is divided into two parts curd and whey. This is then taken to the filling and

pressing unit (UFP) where the separation of curd and whey takes place. Also in this unit the solid

particles are cut into 2 kg blocks and then a pressure of about 1.5 bar is applied on it for 15

seconds in order to get proper blocks of Paneer. This Paneer is taken to the cutting and packaging

unit where it is cut into blocks of 1 kg and vacuum packed. This packed Paneer is then stored in

the blast unit for 2 to 5 hours at a temperature of 0 to -5 C before it is sent out in the market.

Hence the process of manufacturing of Amul Fresh Paneer is standardized. The plant in Khatraj(Gujarat) has a capacity of producing 750 Kgs of Paneer per Hour. Also as compared to local

dairies, less manpower per process is required.


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Page 40

COMPARISON WITH COMPETITORS PRODUCTS

As stated earlier, there were some problems related to the quality of Amul Paneer that were

given by the customers during the first two phases. There was a need to find out where does

Amul lag behind in terms of quality. So in order to overcome these problems, we decided to do

chemical analysis ofCompetitors Product and compare it with the results of Amul Fresh Paneer.

Hence we got samples of Paneer from Sugam Dairy (Baroda), Sabar Dairy (Himmatnagar) and

Modern Dairy (Pune) and did a chemical analysis of these samples.

The results are shown in the table below:-

TESTS AMUL SUGAM MODERN SABAR

MOISTURE % 49.46 46.08 62.32 58.32

FAT % 54.40 62.12 45.11 24.5

PH 5.65 5.69 4.98 5.63

1. MOISTURE: The moisture level is an indicator of the percentage of water content in

the Paneer. It helps to make the Paneer soft and usable. But high level of moisture is

damaging. It decreases the shelf life of Paneer. As per the analysis done at the testing lab

of Amul, Modern dairy (Pune) had the highest moisture level of 62.32%, followed by

Sabar dairy (Himmatnagar). Amuls Moisture level was around 49.46% while that of

Sugam was around 46.08%.

2. FAT: The Fat percentage here indicates the Fat on Dry Basis. This test is done by

removing the moisture completely from Paneer and then testing the amount of fat present

in the solid part left. It is a measure of quality of the Paneer. According to the PFA Std.

the min Fat% dmbi.e. fat on dry basis should be 50. As shown in table, we can see that

Sugam dairy (Vadodara) gives the highest percentage of fat 62.12% where as Amul gives

it around 54.4%. On the other hand, the fat content of Modern Dairy (Pune) and Sabar

Dairy (Himmatnagar) were way below the PFA std.

3. PH: The Ph is just the indication of concentration of Hydronium ions in the Water. It is

an indication of whether the product is suitable for consumption or not. All dairies gave

nearly same Ph values.


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Page 41

There was a problem with surface finishing of Amuls fresh Paneer. The surface was a bit rough

and smooth finishing of Paneer was not got as compared to other Dairies. Also the packaging

was different compared to the other dairies.

As a result of this analysis, Amul decided to make changes in the product. This was necessary as

Amul was not having a bigger market share as compared to the competitors. So in order to get

orders, Amul needed to have a product that is above the standards of the current competitors

products.

Hence changes were made and the chemical analysis showed the following results for Amul

Fresh Paneer:

TESTS AMUL

Before

AMUL

After

MOISTURE % 49.46 61.30

FAT % 54.40 51.67

PH 5.65 6

Hence in order to correct the problem of hardness and Surface finishing, Amul increased the

moisture level to 61.30% from 49.46%. This was done keeping in mind that there is no change in

the shelf life of the product that is up to 8 days. There was a slight reduction in the Fat% in order

to get the desired product. Also the Ph value increased to 6 which showed positive signs of

improvement.

Also I order to get rid of the Supply problems; we had a meeting with three distributors and

divided the route among them. On some routes we needed to create a new market whereas in

some we needed to expand the market.


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Page 42

CREATION AND EXPANSION OF MARKET

After the changes were made in the contents of Amul Paneer, it was our task to create and

expand the market of Amul Fresh Paneer. A study of the market was already done in the first

phase. So it was our task to come up with the right schemes so that the product is able to capture

the market as early as possible.

Pricing: Since we were going to concentrate only on the institutional segment, which is

a very price sensitive segment, it was necessary that we come up with the right pricing.

Since the price of fresh Paneer prevailing in the market was in the range of Rs.135-

Rs.200 per kg, we decided to give it at Rs.175-180 per kg. This price also included the

distributors margin.

Packaging: This came up as an important variable in the factor analysis that was done inPhase II. This variable lied in the factor of basic needs. Unlike other dairies, Amul

decided to use transparent packaging for Amul Fresh Paneer. Sugam used vacuum sealed

packaging for its Paneer whereas Modern Dairy used normal packaging.

Promotion: we had decided to give 4 % rebate to the institution who gives us regular

bulk orders of Fresh Paneer, but this scheme was taken back. Also another Promotion

scheme of co-branding was suggested to Amul Dairy. According to this scheme, we

would have Menu Cards of Hotels which would have a note below saying You can trust

on our Quality as we use Amul Products here. This scheme will take time to implement

in the market though. ]

Also many customers faced problems while using the Paneer as they did not know the

procedure to use Amul Paneer. The restaurant chefs used to directly use the Paneer taken

out from the refrigerator. But that is not the right procedure. So it was our task to educate

them that before using the Paneer, they need to soak it in lukewarm water for about 5-10

minutes. This helps the Amul Paneer to regain its moisture.

With the above schemes we were confident that we would be able to get some orders from the

market and expand the market share for Amul in the Fresh Paneer Market.


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MARKET EXPERIENCES

1. We had a distributor from Indore (Madhya Pradesh) come in for a visit to Amul Dairy.

He had a good network established in Indore and supplied to all leading Hotels and

Caterers at a regular basis. He was supplying Paneer from Modern Dairy (Pune) to all his

clients. He wanted to use Amul Paneer but wasnt getting the supply of it regularly. He

had a daily demand of about 400 kg and wanted regular supply. We struck the deal and it

was our first success with the product.

2. Next we went to Hotels and Caterers of Anand. We got a positive response from them

about the product. We gave them the price and assured them regular supply. We gave

them the number of the distributor who was going to supply to Anand. But we didnt

receive any orders instantly.

So we decided that we would distribute the samples of Amul Fresh Paneer when we go to the

Customers to finalize the deal. We got Samples of 100 grams packed in packets and we took it

along with the 1 kg block that we would supply to them.

3. We revisited the Anand Market and distributed the100 gram samples. Same was done in

Vadodara and NH8 as well.

As per the current response that we have got, we expect the Market share graph to look like the one

given below after the end of Phase III. But we Expect the Market share to increase drastically in the

coming years.

local

47%

Amul40%

Sugam

13%

Expected Market Share of Surveyed

Area After Phase III


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QUESTIONNAIRE

1) Occupation :

Restaurant Retailer Caterer

2) Do You Use Amul Products

a) Yes b) No

3) If yes, Which of the following products do you currently use

a) Milk

b) Butter

c) Cheese

d) Ghee

e) Paneer

f) Cream

g) Ice cream

h) Others as well

4) Scale the following features taken into consideration while buying Paneer.

Most

Important

Somewhat

Important

Neutral Less

Important

Not

Important

Price

Packaging

Quality

Brand

Supply Services

Shelf Life

Promotion Schemes


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5) What is your daily demand of paneer?

a) 0-5kg b) 5-10kg c) 10-15 kg d) 15 and above ____________

6) What price do you buy paneer?

a) 130-145 b) 145-160 c) 160-180 d) 180 and above ____________

7) You purchase Paneer on

a) Credit b) cash

8) Have you faced any problems while using Amul Paneer?

a) Yes b) No

9) If Yes, Please write your complaints/ comments here

Name: ____________________________ Contact number:______________________


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REFERENCES

Business Research Methods by William G Zigmund

Maketing Management by Philip Kotler

www.statisticshell.com

http://www.nabard.org/fileupload/DataBank/TechnicalDigest/ContentEnglish/issue9td-6.pdf

http://en.wikipedia.org/wiki/Amul

http://www.amul.com/products.html
http://www.statisticshell.com/http://www.statisticshell.com/http://www.nabard.org/fileupload/DataBank/TechnicalDigest/ContentEnglish/issue9td-6.pdfhttp://www.nabard.org/fileupload/DataBank/TechnicalDigest/ContentEnglish/issue9td-6.pdfhttp://en.wikipedia.org/wiki/Amulhttp://en.wikipedia.org/wiki/Amulhttp://www.amul.com/products.htmlhttp://www.amul.com/products.htmlhttp://www.amul.com/products.htmlhttp://en.wikipedia.org/wiki/Amulhttp://www.nabard.org/fileupload/DataBank/TechnicalDigest/ContentEnglish/issue9td-6.pdfhttp://www.statisticshell.com/

amul sip report

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