Branding and Brand Management: Case of Amul

BRANDING

In the appearance of globalization and liberalization both brand and branding has become essential part of
every competitive business firm. To become part of competitive and ever changing business world and to
maintain the existing business image business organizations have been continuously focusing upon
introducing new innovative branding practices and strategies. Present case will be focusing upon brand
and branding strategies of Indian brand name dairy cooperative, AMUL, in western India (Gujarat
Cooperative Milk Marketing Federation (GCMMF)) that has developed as a successful model for doing
business in large emerging Indian economy. Amul is been primarily accountable, through its inventive
practices and adaptive to market changes, for India to become world’s largest producer of milk. This
chapter draws various lessons from the experiences of AMUL that would be useful to business
organizations globally.

ORGANIZATION BACKGROUND

Amul (Anand Milk-producers Union Limited), formed on December 14, 1946, is a dairy cooperative
organization of India. The brand name Amul, has been originated from the Sanskrit word Amoolya, it
means priceless. It is a brand name managed by cooperative organisation, Gujarat Co-operative Milk
Marketing Federation Ltd. (GCMMF), which today is jointly owned by some 2.41 million milk producers
in Gujarat, India. It is situated in Anand town of Gujarat and has been a true example of a co-operative
business organization's success. The Amul Pattern has established itself as a completely suitable model
for rural expansion and growth. Amul has promoted the White Revolution of India, which has contributed
in making India the largest producer of milk and milk products in the world. Gujarat Cooperative Milk
Marketing Federation (GCMMF) is India's leading food goods marketing organisation. In state of Gujarat
Amul is a state level head body of milk cooperatives which aim to endow with remunerative returns to the
farmers and also gratify the interests of customers by continuously providing quality products according
to varying needs of customers also by providing good value for money. Amul's product range consist of
milk, milk powders, ghee, butter, cheese, curd, chocolate, ice cream, cream, shrikhand, paneer, gulab
jamuns, basundi, Nutramul brand and others.
The Kaira District Cooperative Milk Producers’ Union Limited was established as a response to
utilization of marginal milk producers in the city of Anand (in Kaira district of the western state of
Gujarat in India) by traders or manager of existing dairies. Producers of milk had to travel long distances
for delivery of milk to the only dairy, named as the Polson Dairy in Anand – frequently milk went sour,
particularly in the summer time, as producers had to physically carry milk in containers individually. In
winter, the producer was either left with excess of unsold milk or had to sell it at very low prices.
Moreover, the government at that time had given particular monopoly rights to Polson Dairy (during that
time Polson was the well known butter brand in the country) to collect milk from Anand and was supplied
to Bombay city in turn (about 400 kilometers away). India ranked nowhere amongst milk producing
countries in the world by the end of year 1946 (Akoorie and J.Scott (1999)).

The manufacturer of Kaira district took guidance of the nationalist leaders, Sardar Vallabhbhai
Patel (first Home Minister of free India) and Morarji Desai (Prime Minister of India). They guided the
farmers to form a cooperative firm and supply milk directly to the Bombay Milk Scheme instead of
selling it to Polson (who did the same but offer low prices to the milk producers). As a result of this the
Kaira District Cooperative was established to collect and to process the milk in the district of Kaira. The
new milk plant had the potential to pasteurize 300,000 pounds of milk per day, and manufacture 10,000
pounds of butter per day, also 12,500 pounds of milk powder per day and 1,200 pounds of casein per day.
With the help of R&D and technology development at the Cooperatives had led to the success of
production of skimmed milk powder from buffalo milk. This gave birth to a modern dairy industry in
India.
Now we move to year 2000. The image of Indian dairy industry and particularly in the State of
Gujarat it’s been redefined or overtaken by the brand name Amul. Mean time India has emerged as the
largest milk producing country in the world (Table 1). Gujarat emerged as the most successful State in
terms of milk production and milk product production with its cooperative dairy movement. The Kaira
District Cooperative Milk Producers’ Union Limited, Anand turn out to be the focal point of dairy growth
in the entire region and AMUL emerged as a one of the most renowned brands in India, also ahead of
many international brands.
“Insert Table 1 here”
Marketing
Starting with a single common plant at Anand and two village cooperative societies for milk
procurement, the dairy cooperative movement of State of Gujarat had developed into a network of 2.12
million milk producers (i.e., farmers) who are organized in 10,411 milk collection cooperatives (called
Village Societies). These Village Societies (VS) further supply milk to thirteen independent dairy
cooperatives (called Unions). AMUL is a one such Union. Milk and other related milk products from
these Unions are marketed by a general marketing organization (called Federation). Figure 1 gives the
hierarchical structure of this extensive network of cooperatives.
“Insert Figure 1 here”

Amul Butter: Pricing Strategy

Today GCMMF is India's largest exporter of Dairy Products. It has been known as a "Trading House"
status. GCMMF has received the APEDA Award from Government of India for Excellence in Dairy
Product Exports continuously for the last 9 years.
When Amul was formed, consumers were having very limited purchasing power, and reserved
consumption levels of milk and other dairy products too. Thus Amul followed a low-cost price strategy to
make its products affordable to the masses and attractive to consumers by assuring them value for money.

Despite of high competition in the dairy product segment from firms such as Hindustan Lever, Nestle and
Britannia, GCMMF guarantees that the product mix and the series in which Amul launch its products is
reliable with the core values of delivering butter at a basic, reasonable price to plea the common masses
(Table 2 and Figure 2). This price strategy initially helped AMUL BUTTER to create its brand image in
the domestic sector of the society.
“Insert Table 2 here”
“Insert Figure 2 here”

Effective implementation of pricing strategy of Amul resulted that, at present Amul has 2.41 million milk
producer members with average milk collection of 5.08 million litres/day. Moreover India, Amul has
penetrated overseas markets such as Mauritius, UAE, USA, Bangladesh, China, Singapore, Australia,
Hong Kong and a few South African countries. Its proposal to enter Japanese market in 1994 had not
accomplished, but now again Amul is planning to enter Japanese markets. Other potential markets under
consideration include Sri Lanka.
Brand Promotional Strategy of Amul

In 1966, Sylvester daCunha, joined ad agency of Amul. At that time, situation of India was like one
couldn't afford to have food and food products. Sylvester daCunha decided it was time to change the
image. Scott Bradbury, the marketing genius behind success of Nike and Starbucks, once said “A giant
brand is a legend that is never completely told. A brand is a symbolic story that’s developing all the time.
Stories create the exciting context that people need to locate themselves in the larger practices”.
Since the Sixties to the Nineties, the Amul ads have come a long way. whereas most citizens agree that
the Amul ads were at their peak in the Eighties they still continue that the Amul ads continue to rag a
laughter out of them The Amul ads are one of the greatest running ads based on a theme, now vying for
the Guinness proceedings for being the fastest running ad movement ever. While most of the public
agreed that the Amul ads were at their highest point in the Eighties they still maintain that the Amul ads
continue to tease a laughter out of them The Amul ads are one of the longest running ads based on a
theme, now vying for the Guinness records for being the longest running ad campaign ever.

“Insert Figure 3 here”

Many researchers believe that the charm of Amul publicity and popularity lies in the catchy lines
followed by them in the advertisements (Figure 3). Because the humor created by adds was enjoyed by
all. They don't mention on anyone’s nationality or hurt people’s sentiments. These ads are pure and
simple, everyday fun.

Introducing higher value products

Starting with liquid milk offered by Amul, GCMMF enhanced the product mix through the progressive
addition of superior value foodstuffs while maintaining the preferred growth in existing products. Brand
extension is an extensively established brand strategy to attach an existing renowned brand name
for a new product introduction in a different product category (Swaminathan and Reddy, 2001).
And these strategies were generally used because of the thought that built influential brand
positioning, to boost awareness among customer and quality alliance and reduces the new product
risk for consumers (Taylor and Bearden, 2002).
Despite of high competition in the high value dairy product segment from established firms such as
Hindustan Lever, Nestle and Britannia, GCMMF guarantees that the product mix and the range in which
Amul introduces its products is steady with the core philosophy of providing milk at a basic, and
affordable price. In early 1950’s studies have shown that usage of mobile veterinary dispensaries, wireless
sets to connect mobile units to service centers, developing a programme of cross breeding of cows in
early 1970s etc. that have led to a exceptional rise in efficiency of milk (Patel, 1988).

MEDIA STRATEGY

Advertising is any paid form of non-personal communication to create awareness, develop perceptions and
persuade the audiences to make a specific purchase. Media strategy means the organized selection of the
medium of media to be used so that the preferred message must reach the target audiences. Thus, depending
upon the product or service and also depending upon target customer’s need media of advertisement and
the target market, a promoter makes choices among the types of media that will provide maximum
efficiency and benefit the product and service too. Brand reputation has been stated in term of
consumers perception about quality associated with a brand Aaker and Keller (1990); Barone and
Romeo (2000). Amul butter is mostly advertised using inventive and innovative hoardings, slogans,
usually mocking or depicting the recent issues. Media strategies helped Amul a lot to build its strong brand
reputation over the customers. As a brand Amul is very well advertised by using intermediates like TV
commercials, print advertisements, and by outdoor advertising. But the company has not paid a lot of
attention for the advertisement of Amul Chocolates which is apparent from the lack of awareness and
disinterest from the public.

Types of media used

1) Print medium

Amul Chocolates started publicity with print advertisement in the 1970s.

But the occurrence and reach of these advertisements was restricted and unsuccessful to create the
desirable buzz in the market.
Amul Chocolates also advertised in Indrajal Comics, a series of comics launched by The Times of India,
in 1964 which was relatively popular in 1970s and 1980s.
2) TV commercials:

Series of these advertisements were launched on TV with filling the blanks by the right words of this
punchline. In one of the adds, a young teenage girl sings ‘I am 2 old for dolls, 2 young for the disco’, her
elder sister (I think!!), sings back, “But I think you are just right for Amul chocolates” in the year 2000,
There were 2 famous TV advertisements that were aired in year 2005.
“Insert Figure 4 here”

Father – son ad

Father role played by actor Ram kapoor is flying back home from trip and has bought Amul chocolates
for his kid. He habitually keeps the chocolate in the right side of his coat but this time to puzzle his kid he
keeps the chocolate on left side. On coming home the kid checks the left side only and is very happy to
find the chocolates. And in the background of add the wife is shown smiling. The ad focuses on strength
of a father son relation is, similarly a consumer will have an enduring connection with Amul Chocolates.

Rose day

This advertisement have the tagline that for somebody you love, is acceptable by showing a boyfriend
gifting his girlfriend Amul chocolate which give to happiness the girl.

Inspite of these advertisements being aired for 6 years old; they were also aired during the cooking reality
show, Master Chef India (Amul sponsors) in 2011. This evidently shows that the advertisement was not
altered with the new changing times.

Distribution network

In over 500,000 retail outlets Amul products are available across India throughout and network of over
3,500 distributors. There are 47 warehouses with dry and cold storehouse to buffer stock of the complete
range of products.

GCMMF manage on a progress demand draft center from its wholesale seller instead of the cheque
method implemented by other major FMCG corporations. This practice is reliable with GCMMF's
attitude of upholding cash dealings during the supply chain and it also diminishes dumping.
Wholesale dealers carry record that is just sufficient to take care of the transfer time from the branch
storehouse to their building. This is just-in-time (JIT) inventory strategy that improves wholesalers return
on investment (ROI). All GCMMF branches employ in route setting up and have devoted vehicle
operations.

Umbrella brand

The network of Amul Company follows an umbrella branding strategy. Amul is the general brand having
majority of product categories produced by different unions: liquid milk, milk powders, butter, ghee,
cheese, cocoa products, sweets, ice-cream and condensed milk.

Amul's sub-brands consist of variants such as Amulspray, Amulspree, Amulya and Nutramul. The edible
oil goods are grouped around Dhara and Lokdhara, mineral water is sold under the Jal Dhara brand while
fruit drinks bear the Safal name.

By maintaining on an umbrella brand, GCMMF not only competently avoided inter-union disagreement
but also shaped an opportunity for the union members to collaborate in developing products.

Managing the supply chain

However the cooperative system was created to carry together farmers, it was recognized that
professional managers and technocrats would be requisite to administer the network successfully and
make it commercially feasible.

Coordination

From the large number of associations and entities in the supply chain and having decentralized
responsibility for various actions, effective coordination is critical factor to be controlled for efficiency
and cost control. GCMMF and the unions played a major role in this progression and helped in jointly
achieving the preferred degree of control within the organization.

Buy-in from the unions is assured as the plans are approved by GCMMF's board. The 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.

The federation handles the distribution of end products and coordination with retailers and the dealers.
The unions coordinate the supply side activities.
This include monitoring milk collection supplier, the supply of animal feed and other supplies, provision
of veterinary services, and educational activities.

Organization of third party service providers

From the establishment of business organizations, it was recognized that the unions' core activity set in
milk processing and the manufacturing of dairy products. Accordingly, marketing efforts (i.e., brand
development) were implicit by GCMMF. All supplementary actions were entrusted to third parties. These
include logistics of milk gathering, delivery of dairy products, sale of products through dealers and retail
stores, prerequisite of animal feed, and veterinary services.

It is significantly noting that a number of these third parties are not in the structured sector, and many are
not efficiently managed with slight regard for quality and product service.

This is a mostly significant issue in the logistics and transport of a consumable commodity where there
are already weaknesses in the essential infrastructure.

Introducing best practices

A key foundation of competitive advantage has been the project ability to constantly implement best
practices across all elements of the system: the federation, the unions, the village societies and the supply
channel.

In developing these practices, the organization and the unions have adopted successful models from
around the world. Implementation of various TQM practices and strategies like quality circles,
housekeeping, kaizen and good accounting practices at the village society level contributed in success of
Amul. Major focus of TQM strategies has been on regular continuous improvement for accomplishing
long term targets rather than just achieving short term profits.

This improvement program across the Amul involved large number of members and employees for the
implementation of various strategies and this made success rate consistently high.

For example, every Friday, without stopping, from 10.00 a.m. and 11.00 a.m., all employees of GCMMF
gather at the closest office, it can be a department or a branch or a depot for the discussion of their various
quality issues/ problems.
In advance each meeting has its pre-set plan in terms of Purpose, Agenda and Limit (PAL) with a process
check at the closing stages to record how that meeting was carried out. Similar methods are been
implemented in village societies, at the unions and even at the wholesaler as well.

Benefits accomplished by implementing TQM strategies consist of reduction in transportation time from
the depots to the wholesale trader, improvement in ROI (rate on investment) of wholesale dealers,
achievement of Zero Stock Out through enhanced accessibility of products at depots and also the
implementation of JIT (Just-in-Time) in finance to reduce the float.

Kaizen (gradual improvement) at the unions have facilitated to improve the quality of milk in terms of
acidity and sour milk. (Kaizen is another TQM strategy to improve the quality; this is extremely focused
on projects to increase the quality) For example, Sabar Union's records show a decline from 2.0% to 0.5%
in the quantity of sour milk/curd received at the union.

The most inspiring feature of this large-scale roll out is that development processes are spinning the
village societies into individual improvement centers.

Technology and e-initiatives

In the ever changing globalized world modern technology and various e-initiatives taken up by Amul also
contributed in the success of the brand. GCMMF's technology strategy is composed of four distinctive
components i.e., new products, process technology, and complementary assets to enhance milk
production and e-commerce.

Figure 5: Brand Promotional Strategy of Amul

Few dairies of the world have the extensive assortment of foodstuffs as produced by the GCMMF
network. Village societies are expectant during subsidies to establish alarming units. Automation in
processing and packaging areas is regular, as is HACCP certification. Amul aggressively follow progress
in embryo transfer and cattle breeding to regulate and to improve cattle quality and to increases in milk
yields.

GCMMF was among one of the first FMCG (fast-moving consumer goods) firm in India to utilize
Internet expertise to execute B2C commerce.
Today customers can select a diversity of products through the Internet and be secure of timely delivery
with cash on payment option.

Another e-initiative undertaken by the Amul is to provide farmers access to information relating to
markets, technology and best practices in the dairy industry during net enabled kiosks in the villages.

GCMMF has also implemented a Geographical Information System (GIS) at both ends of the supply
chain, i.e. milk gathering as well as the promotion process.

Farmers now have improved access to information on the output as well as sustained services while
providing a superior planning tool to marketing personnel.

Conclusion:

Business organizations that are intelligent enough to extend control processes throughout with
better usage of equipped to perform and supply chain synchronization are the ones that are capable to
provide large volumes and take pleasure in top line growth in revenues.
Growth of dealer necessitates promotion with a long-term perspective. It is exciting to note that
this success was attained by AMUL through a procedure of education and social progress activities -
activities that are not generally measured to be standard business practices. This type of ‘out of the box’
visualization is necessary for emerging innovative mechanism in new, different atmosphere where
construction of relationship with consumers goes much ahead of advertising and marketing messages and
useful product offerings.
Environments with immature or underdeveloped markets and suppliers (as in the case of AMUL) add one
more aspect of difficulty concerning to the relative speed of growth of these two areas. Through its
pricing approach, AMUL has been able to make proficient balance in the growth of markets and suppliers
and has attained some degree of synchronization. Brand management and brand value should be the top
precedence of the company Amul is among those companies who have realized the need for the same.
And have measured it as a strategic matter that should be dealt on regular basis, because in the past
companies were differentiating on the basis of products they manufacture. But now companies who are
able to meet and discover customer’s latent requirements for the long run only these types of brands stay
in business. Need of the hour is to discover next generation needs before they demand for it and making
the customer aware about extended brand products availability udder same brand name.
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