Business model Digital transformation of Amul

Introduction
Amul is an Indian dairy cooperative association established in Anand, Gujarat.
Amul is derived from the Sanskrit word 'Amulya,' which means valuable or
precious. This case study on Amul analyzes the company's history, business
strategy, revenue, and the important elements that contributed to Amul's
success. Amul was founded in 1946 and is handled by the Gujarat Co-operative
Milk Marketing Federation Ltd. (GCMMF), a cooperative entity comprised of
3.6 million Gujarat milk farmers today. In 1946, the Kaira District Milk Union
Limited was formed. Until his death in the 1970s, Tribhuvandas was the
organization's leader. In 1949, he spoke with Dr. Verghese Kurien and
encouraged him to join the White Revolution's objective. Dr. Verghese Kurien
is largely regarded as Amul's originator.
The cooperative's dairy's success quickly extended across Anand's Gujarat area.
As a result, five unions were established in other districts, including Mehsana,
Banaskantha, Baroda, Sabarkantha, and Surat, on the 'Anand pattern.'India's
White Revolution began in 1970. The Gujarat Co-operative Milk Marketing
Federation Ltd. (GCMMF), an apex marketing organisation for these district
cooperatives, was established in 1973 to pool resources and increase the market
while reducing advertising costs and eliminating internal rivalry. The Kaira
Union, which had been known by the brand name Amul since 1955, changed its
name to GCMMF. Dairy cooperatives in Gujarat have built an economic
network that connects more than 3.1 million village-produced milk products to
millions of Indian consumers during the previous five and a half decades.

Business model and organizational strecture of Amul

Amul follows a unique strategy in which it gives its customers "value for
money" goods while securing the premiums of the milk-producing farmers who
supply it (as a shareholder). Because milk is a perishable commodity, the
rancher may suffer a loss if it isn't sold before the end of the contract period.
The "Anand design" cooperative framework was named after Amul's
cooperative model. It's a three-tiered system that includes municipal social
orders, regional dairy associations, and a state-level entity. Each level is
financially independent of the others and employs agents from the levels below
it.

It's not difficult to comprehend. When one individual does not have enough
cash to provide the requisite capital for the firm, other members who share the
same goal pool their resources to create a large-capital organization. The
cooperative concept is helpful since it ensures brand trust. Even banks prefer to
lend money to cooperatives rather than to individuals. Amul now has 30 lakh
farmers from all over India as members.
The Kaira District Milk Cooperative Union (Amul), based in Anand, has
developed at a rapid pace. It joined together with other Gujarat milk
cooperatives and today represents 2.12 million farmers, supplying milk to
10,411 localities. It focuses on fourteen area-level plants (associations) that are
overseen by GCMMF.

From the start, it was assumed that this activity would directly benefit and alter
disadvantaged farmers, as well as contribute to societal betterment. Markets at
the time, and even now, are rudimentary and lacking in basis. Amul and
GCMMF realized that development and progress could not be left to market
forces alone, and that deliberate intervention was essential.

Two essential requirements were identified. -

For starters, long-term growth would necessitate coordination of free market

activities. It would need a groundswell of support for providers and customers
moving in lockstep.
Second, effective system management and commercial viability would need
skilled administrators and technocrats.

Amul's Three-tier Model Amul is a remarkable company that operates with

simplicity and precision. It follows a three-step method in which each body
performs well. The three levels are as follows:

The Village Dairy Cooperative Society - Each manufacturer is a member of the

village dairy cooperative society, which is a manufacturing community.
District Milk Unions – Members of the Village Dairy Cooperative Society elect
delegates who constitute the District Milk Union.
State Milk Federation - This federation is in charge of product distribution and
sale in the market.
The Umbrella Brand Amul
The system employs a method known as umbrella marking. Fluid milk, milk
powders, margarine, ghee, cheddar, cocoa items, sweets, frozen yogurt, and
consolidated milk are among the most common item categories developed by
various associations. Amul's sub-brands include Amulspray, Amulspree,
Amulya, and Nutramul, to name a few.
The delectable oil goods are grouped under the Dhara and Lokdhara brands,
while mineral water is marketed under the Jal Dhara label and natural product
beverages are supplied under the Safal label. GCMMF skilfully maintained a
strategic distance from association disputes by requiring an umbrella brand,
opening the way for customers to collaborate in the creation of things.

Product Development at Amul

The essence of the cooperative framework and productivity drove Amul's item
improvement. Amul, as a farmers' cooperative, was focused on acquiring all of
the milk that the former had to provide. As the generation grew, it became
increasingly vital for Amul to process the surplus milk and add new item
classifications.

Butter with Margarine

Margarine, which was first introduced in 1955, was one of Amul's most popular
milk products. It was also the first time Amul had successfully challenged the
authority of a well-established brand. Amul dethroned Polson to become the
unchallenged leader in margarine marketing.

Cheddar with cheese

In 1959, GCMMF launched cheddar, followed by cheddar powder in the mid-

1970s. During the 1980s, cheddar's popularity grew.

UHT Milk & Milk

Apart from selling milk to sections of Maharashtra and Rajasthan, Amul was
the market leader in Gujarat's entire milk display in 2002, with a 90% share of
the market.

Amul's success was aided by a number of factors.

The Amul Girl is a fictional character created by Amul (The Amul

Advertising Campaign)

Sylvester da Cunha, the managing director of an advertising firm, was engaged

by Amul in 1966 to develop an ad campaign for Amul Butter. The campaign
was conceived as a series of hoardings with relevant commercials that linked to
everyday situations by DaCunha. It was a hit, and it set a Guinness World
Record for the world's longest-running commercial campaign.
In the 1980s, Amul hired cartoonist Kumar Morey and playwright Bharat
Dabholkar to create advertising for the company. Dabholka, on the other hand,
is opposed to the use of celebrities in advertising efforts. Chairman Verghese
Kurien, according to Dabholkar, created a free environment that promoted the
development of the advertisements.

The Amul girl is the company's advertising mascot, which is used to promote
the brand. In its longest-running commercial campaign, the business has
effectively used the cartoon persona. The Amul girl is employed to provide a
sense of humour into the company's print advertisements.

Amul's advertising have been well received by Indians, and the business has
experienced increased consumer interaction. Amul's brand recall value has
grown. The Amul girl ad campaign is widely regarded as one of the finest
advertising concepts in India.

Amul's Creativity

Amul is always innovating, whether it's with new goods, innovative marketing
efforts, or questioning existing societal practices to create better ones. As
previously stated, Amul was the first company in the world to produce skimmed
milk powder from buffalo milk in the 1960s.

Amul also changed from traditional operations to a more cost-effective and

successful structure thanks to its three-tiered cooperative structure. Amul was
awarded the "CNN-IBN Innovating for a Better Tomorrow Award" and the
"World Dairy Innovation Award" in 2014 for its continual innovation.

Amul's Efficient Supply Chain Amul's supply chain is organized in a three-tier

cooperative structure. It is made up of a dairy cooperative society at the village
level that is linked to milk unions at the district level, which are then linked to a
state-level milk federation. The local dairy organization collects milk, the
district milk union obtains and processes it, and the state milk federation
markets it.

The success of this approach can be attributed to the fact that Amul was the first
corporation to use it. In the 1970s, it was reciprocated across the country as part
of 'Operation Flood.' The model guarantees that processes run smoothly and
efficiently. As a result, the Amul model has aided India in becoming the world's
largest milk producer
.

Amul's Coordinating Nature

Amul uses a 'branded house architecture' approach, in which everything it
promotes is done under one brand name: Amul. The primary focus is on
promoting the parent brand rather than individual goods, which allows Amul to
increase brand awareness while spending less on marketing and advertising.

Given the large number of associations and substances in the inventory network,
as well as the dispersed responsibility for various activities, good coordination
is critical for efficiency and cost management. GCMMF has a thorough
understanding of the procedure and has achieved the desired degree of control.

The product portfolio of Amul complements their marketing strategy.

The product portfolio was the second part of Amul's marketing strategy. Amul's
wide range of goods appeals to a wide range of people. While certain brands,
such as London Dairy, Baskin Robbins, and others, were able to conquer a few
regional (ice cream) markets catering to high-end clients, Amul was able to
maintain their position in the general dairy industry. However, the middle and
lower classes were their primary target demographic. The basic explanation for
their client retention is the product pricing, which will be explored next.

The Low-Cost Pricing Strategy of Amul

The third consideration is the cost of the product. It is one of Amul's most
effective marketing methods. For items that are eaten on a regular basis, it chose
a low-cost pricing strategy. Amul's price approach makes it affordable to its
target market. They were able to keep their client base by raising the price of
items in accordance to the growth in income of their audience. For items with a
lot of competition, a competitive price approach like a one-on-one offer was
used.

Ice cream is one such product line. Because Amul is a co-operative, it strove to
acquire the best price for both the producer and the customer, unlike some
businesses who were solely interested in making a profit. Being an FMCG firm,
however, necessitates a well-planned manufacturing, storage, and distribution
network, all of which are costly. Despite this, Amul offered things at a
reasonable price.

The logistics and supply chain concept was well-planned and executed. Amul
was organized as a three-tiered cooperative.

Milk was produced through cooperative groups at the local level.

Milk unions with processing centers existed at the district level.
Milk federations were in charge of consolidation at the state level.

Amul's Digital Marketing Strategy

Despite not having as much of a presence on television as it once did, Amul's

digital marketing strategy made the most of it using channels like Facebook,
Twitter, Instagram, and others. Amul's digital marketing strategy also made it a
priority to stay in touch with customers and respond to any complaints quickly.

Analysis of Amul Segmentation, Targeting, and Positioning (STP)

Amul is a brand with a product line that appeals to a wide spectrum of

consumers. Let's take a look at how Amul used the three techniques to grow
into a billion-dollar company.

Amul chocolates, Amul Kool drinks, Amul Butter, Amul Lite butter, Amul
Pizza Cheese, Regular cheese, Cheese spreads, Amul milk powder, Amul ice
cream, Amul ice cream, Amul ice cream, Amul ice cream, Amul ice cream,
Amul ice cream, Amul ice cream, Amul ice cream, Amul ice cream, Amul ice
cream, Amul ice cream, Amul ice Nutra Amul
Segmentation by industry: Manufacturers of ice cream, restaurants/food chains,
cafés, and coffee shops. Indian houses, bakeries & confectionaries, street
sellers, and snack stores utilize butter, cheese, and ghee.

Targeting

The value for money brand has created its image as a product that is easily
accessible, inexpensive, and outperforms other brands in terms of quality,
therefore appealing to a broad population, whether urban or rural. Under its
product umbrella, it has addressed children, adults, and many businesses.

Positioning

When you hear the word "butter," what comes to mind? It's unmistakably Amul,
which has established itself as the nation's butter and, in some cases, the only
option for customers. Campaigns such as "The Taste of India" have given an
emotional component to its marketing and solidified its position as a family
staple in every home. Other important characteristics that have positioned Amul
where it is now are value for money, quality, and availability.

Amul's Marketing Competitive Advantage

Amul has a distinct competitive advantage being the oldest Indian milk brand in
India, having been founded in 1946. It has two major advantages over its market
competitors.

Supply chain and distribution channel: Compared to its competitors, Amul has a
well-organized and methodical supply chain as well as years of expertise,
making it a difficult competitor to beat. Amul has over 5 lakh shops around the
country that sell its goods.
Distinguished and diverse product offering: Amul offers a diverse product
portfolio that is easily accessible to end customers through merchants and
exclusive Amul stores. Amul Butter and Ice Cream are the cash cows in
preserving the company's brand position in the market, according to Amul's
product portfolio study.

Amul Dairy has introduced digitalization of artificial insemination of cattle,

marking a significant milestone in the dairy sector's use of digital technologies.
All 1,200 village level milk producer societies in the Amul Dairy milkshed
region have been covered under digitization following satisfactory operational
early results at the Kaira District Milk Producers' Cooperative Union (Amul
Dairy). Amul Dairy has become the first cooperative in India to use a
computerized tracking and monitoring system for artificial insemination.

The system sends signals to the cow owner and the cooperative through mobile
phone when the animal is artificially inseminated (AI). For AI for his animal,
the member milk producer must register with the Amul phone center.

The milk producer and an artificial insemination technician designated by the

milk society get a message, and the chain of events begins. Once the artificial
insemination is finished, the technician visits the animal, and all of the
information is updated on the smartphone, which sends a message to the Amul
contact center and the milk producer.

The computerized system notifies the animal's pregnancy diagnosis, and after
nine months, the calving information, including the calf's sex and date of birth,
is recorded in the mobile application. Deworming and immunization programs
for newborns are also tracked by the system.

Amul Dairy's Managing Director, Amit Vyas, stated, "There is no need for milk
producers to retain paper records because Amul Dairy stores all information
through a computerized system. Artificial insemination has been digitized to
give quick service to milk producers, and information about milch cow has been
recorded in the mobile software system and can be studied."

This digital intervention for a critical function of milk production is receiving a

positive reaction from Amul.

"Amul Call Center is already registering over 4,500 artificial insemination calls
each day. Amul Dairy is still working to improve this method's effectiveness
and efficiency "Vyas said.

In the milkshed area, Amul Dairy undertakes around 1 million artificial

inseminations every year.

Transparent information, as well as its analysis, may be utilized to make precise

judgments and help the animal husbandry industry thrive thanks to
digitalization.
Resourses :
https://startuptalky.com/amul-marketing-strategies/

https://amul.com/m/about-us

https://www.thehindubusinessline.com/economy/agri-business/amul-adopts-digital-
tracking-monitoring-systems-for-artificial-insemination/article32362640.ece