Company Background

In 1949, Dr Verghese Kurien, a government employee, was appointed in Anand, Gujarat, to manage
dairy industry. While working with the farmers, he found that they were being exploited by canny
businessmen at Polson dairy. With Government support, Polson dairy had obtained exclusive rights
over milk produce of Anand and neighbouring districts. This effectively made them a monopoly. Taking
advantage of this, they started exploiting farmers by procuring milk at very low prices.

To keep farmers’ economic interest at top, a milk producers’ cooperative was started under the
guidance of Sardar Patel. Dr. Kurien was convinced to work towards making milk cooperatives a
movement across Gujarat. He quit his job and started to unite farmers to help them get better prices.
The movement forced the government to stop the monopoly provided to Polson. In the process, the
brand AMUL- Anand Milk Union Limited was born.

Today, the brand which started in a small village of Kheda district is the world largest producer of milk.
The dairy farmers get more than 50% of the selling price of the dairy products in the market, which is
very high compared to other industries.

For his contribution towards development of Indian Dairy Industry by Operation Flood, Dr. Kurien is
known as the ‘Father of white revolution’.

An Overview: AMUL’s Marketing Strategy

Amul which was registered in 1957, failed to impress the consumer initially. Its rival Polson always
made butter from stale cream whereas Amul was determined to make their butter only of fresh cream.
Amul realized that consumers’ taste and preferences are hard to change. It started adding colouring
and salt to provide the taste people were used to. It also felt the need to start an advertising campaign
to widen its reach. Amul started their advertising campaign in 1966. DaCuncha ad agency was
onboarded by Mr. Kurien, to design the ad campaign for Amul. In those days television media didn’t
have penetration and print media was expensive. Amul, a relatively new entrant in the market which
was turning from monopoly to oligopoly, could not afford to compromise on cost. So, the founder of
DaCuncha agency Mr.Sylvester DaCuncha came up with an idea of ad campaign through hoardings
which has high penetration and was affordable.

Sylvester and Eustace Fernandes, Art director at DaCuncha wanted to create a mascot for Amul, which
could grab people’s attention and associate Amul brand to that mascot. In 1966, the Amul Girl was
first conceptualized. It was created in response to rival brand Polson’s girl. DaCuncha wanted to design
the mascot which housewives could easily relate to. Who else can better fit that than a little girl? The
cheerful blue-haired little child in a red-polka dotted dress has mesmerized the audience for almost
50 years now and become one of India’s longest running outdoor ad campaigns. The Amul Girl
highlights the brand personality and is very creatively used by the firm in its communications,
promotions and consumer engagement efforts. In the same year, Amul’s slogan uttlerly butterly
delicious was founded.

All advertisements were manually painted on walls/ hoardings as digital printing wasn’t common in
those days and the plan was to change the ad every month and then eventually once a week on every
Friday. Thus the marketing agency tried to keep the girl simple and easy to paint. The hoardings of a
chubby cheeked little Amul girl where strategically placed at traffic signals, bus stations, etc.. to grab
people’s attention.

The butter industry in India has a few dominant players occupying significant market share and a large
number of small players. All the firms sell differentiated products and thus product quality and
advertisements play a key role in attracting and retaining customers in such an oligopolistic market.
The persuasive nature of the advertisements ensure that consumers do not shift to a competing brand
and provide the necessary information to facilitate a buy from the customer. However, unlike other
oligopolistic markets the advertising expenditure is relatively low for the butter industry. Amul,
holding approximately 30% market share, spends only 1% of its turnover on advertisement. The
organizations understanding of consumers’ taste and preferences and its unique marketing strategy
has helped build a strong brand association in the common Indian. A primary survey showed that 95%
of people associate butter to Amul butter. The survey also reported that 57% of the people think of
Amul butter when they hear the brand Amul.
Amul has successfully maintained a consistent branding theme over the past 50 years. The marketing
strategy of Amul operates on maintaining temporal consistency, keeping brand advertisement
messaging consistent over time, and marketing consistency, focusing on the quality aspects of the
advertisement. This has helped the build their brand equity while connecting to the common India as
well as the youth via its fresh and surprising advertisements.
The first ad which had Amul girl praying to God with one eye closed and with the other looking towards
butter and wish for everyday with bread and Amul butter was painted on hoardings, buses, walls etc.
it got huge attention and became popular.

For the first year, DaCuncha Communications designed ads with food related concepts. But soon they
realised that to keep an ad campaign long running, they should create interesting concepts which
people look forward to. Thus in 1967, they started creating topical ads. Soon after this Amul started
creatively leveraging trending news to create relevant ads. The unique style combined by the
colloquial flavor and puns was loved by the public. They were quick to understand the public point of
view via external research to drive home the point and make the ads relevant to the audience. The
first topical ad was during horse race season, ‘Thoroughbread’ showing Amul girl as a jockey riding on
a horse and holding a bread. Today the ads are displayed on more than 6000 billboard hoarding across
India.
 Image courtesy: Economic Times

The ads are very thoughtful and have been successful in propagating the brand message of “The Taste
of India” since 1993-94. The campaign has been successful in converting the brand name into a
promise from the seller to the buyer regarding the assurance of a high-quality product at an
economical price. It has been able to weave all its products under this campaign thereby building an
unbreakable bond with the Indian consumers and leveraging it while launching new products.
A survey conducted showcased that butter segment is very price sensitive and hence highly price
elastic. It also has high cross price elasticity. 95% of the respondents have associated Butter to the
brand Amul and the major reasons for brand associations stated were taste and quality, branding and
advertisement and easy availability. 1/10th of them didn’t know any other brands, which produces
butter. Secondary research suggests that Amul has been steadily increasing its market share since the
last four years. Amul has understood the market well and focuses heavily on cost effectiveness. Its

Market Share Brand Association to Butter

95%

Amul Patanjali
Sagar Dalda (Bunge Ltd)
Amul Mothe Diary
Merrilite (Bunge Ltd) Anik Ghee
Raag Others Nutralite Others/Local

efficient supply chain management gives it an edge over its competitors. Another major factor for its
cost competitiveness is its low spend on advertising. Amul does not market itself on the traditional
marketing and advertising mediums. Infact, it spends only 1% of its revenue on advertising. Still it is
the most widely known brand in India(primary survey data). The brand has been fairly active on two
major social media platforms namely Facebook and Twitter. They use these platforms for promotions
and conducting competitions. Besides that they regularly use their mascot to create content around
the latest happenings to attract youth on the platform.
For Amul to continue its success, apart from cost effectiveness it should also focus on decreasing its
price elasticity of demand, i.e. even after the price increases, the demand does not significantly vary.
This can be achieved considering the fact that Amul is almost synonymous to butter in India(primary
survey data). As taste and preferences are not easily changed, Amul can further capitalize on this
aspect by bearing the opportunity cost of heavy marketing and advertising. Also,the present market
standing of Amul and the product offered makes it a market leader. However increasing awareness
among consumers about using low salt food may change consumer preferences. Amul should try a
low salt version of its product as due to technological advancements, preservation is not such an issue
now.
In 2017, Amul worked with more than 1.5 crore milk producers supplying to 5 lac retails outlets and
delivered 65 thousand tonnes of butter. Without any hardcore marketing, Amul continues to be a
household name because of the wide variety of dairy products produced by the firm which caters to
all the age groups.
The understanding of consumers’ taste and preferences, understanding of market dynamics, cost
effectiveness and pricing strategy of Amul and the iconic Amul girl truly present an interesting case
for an economic analysis.