Hassan Union Marketing Plan - 15dec19

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Hassan Milk Union

1. Introduction:

Hassan Milk Union Limited (HAMUL) is a district level milk co-operative


society established under the Karnataka State Cooperative Society Act 1959
on 30th March 1977. At the beginning it was started in a small shed beside
Seetharamanjinaya Temple at Park Road. Presently it is located in a 27-acre
plot in the Industrial Area, B.M. Road, Hassan.

The Hassan Unit started its Dairy development activity during 1975 with the
World Bank Financial assistance under the guidance of Karnataka Dairy
Development Corporation.

It was registered on 30th March 1977 and the operational area of the Union
got delineated to 3 districts namely Hassan, Chikmagalore and Kodagu.
HAMUL at present covers 70% villages in 18 taluks under 1435 functioning
DCSs.

The Union strives hard to


adopt the modern & eco-
friendly technologies to
produce milk & milk products
of international standards to
make our presence prominent
in the global market.

Hassan Milk Union aims to


render the best service at
nominal cost to its members to
increase milk production and
produce good quality milk by
paying remunerative price
throughout the year, thereby
improving their economic and
social condition while ensuring
high quality milk & milk
Present operation area of Hassan milk products to the delighted level
union of the consumers at
competitive price.

2. Objective of Hassan Union


The milk union aims at sustainable rural development through meticulous
planning, training as well as implementation various schemes offered by,
both state and central Government. Its objectives are:

 Formation of dairy co-operative societies under the principles of co-


operation to encourage small, marginal farmers and agricultural
labourers to take up dairy activities.
 To provide continuous and remunerative markets for the surplus milk
in the rural areas.
 To supply quality milk to customer in the urban areas at a competitive
price.

3. Existing Infrastructure:

The Union has the following infrastructure:


 Processing plant of 300 TLPD capacity at Hassan city & 50 TLPD at
Kudige.
 UHT Plant of 200 TLPD
 Chilling centres of 530 TLPD
 BMCs 316 TLPD

4. Present sales performance


The Union is presently selling poly-pack milk & milk products in its
operational areas (Hassan, Chikmangalur and Kodugu districts) as well as
in Hyderabad. Further, it also supplies milk products to KMF Depot for sales
in Karnataka & in the neighbouring states.

The existing portfolio of Milk & Milk Products:

The Union is selling two variants of milk viz., Toned Milk (3% Fat & 8.5%
SNF) and Shubham Milk (4.5% Fat & 8.5% SNF) both in 500 ml pack and 1
liter pack in the operational areas.

In Hyderabad market, the Union sells special toned milk (3% Fat & 9% SNF)
and premium toned milk (3.5% Fat and 9% SNF) both in 500 ml pack and 1
liter pack.

Curd: The Union sells about 21 TKgPD of curd in the operational area &
about 10 TKgPD in Hyderabad market both in 500 ml & 1 liter pack.

UHT Milk: The Union sells Good Life (toned milk) and Smart (double toned
milk) in different SKUs (200 ml, 500 ml & 1 Liter) through KMF.

Milk products: The Union sells the following milk products:


 Ghee (200 ml, 500 ml, 1 Liter packs)
 Peda (250 gm)
 Khova (250 gm)
 Paneer (200 gm, 500 gm)
 Ice cream
The sales performance of Milk Union during last 5 years is given below:

Particulars Unit 2014-15 2015-16 2016-17 2017-18 2018-19


Liquid Milk
A. Poly pack Milk
Hassan TkgPD 48.31 51.26 52.06 54.60 55.50
Chikmagalore TkgPD 41.81 45.65 44.73 45.34 45.80
Kodagu TkgPD 45.76 47.74 46.73 46.16 47.06
Hyderabad city TkgPD 0.00 0.00 30.00 55.00 56.84
Sub total TkgPD 135.88 144.65 173.52 201.1 205.20

B. UHT Milk TkgPD 0.00 6.46 79.04 138.40 173.00

Total (A+B) TkgPD 135.88 151.11 252.56 339.5 387.46

C. Milk Products
Curd TKgPD 16.05 18.55 20.38 21.20 24.79
Ghee 000Lts 1096.41 1330.46 1321.62 1563.17 2103.5
Peda MT 21.53 25.62 28.26 30.00 21.61
Khova MT 1.52 3.60 4.52 5.00 6.17
Ice cream TLPD 0.00 0.00 0.00 0.00 5.00

In addition, the Union is supplying bulk milk to neighbouring Kerala


Cooperative milk union and Andhra Pradesh Dairy development federation
besides inter-dairy sales to Dakshina Kannada milk Union, Mother Dairy,
Yelahanka and CR Patna dairies. Further, about 185 TKgPD of surplus milk
was sent for conversion to the plants situated within & outside the state
during FY 2018-19.

Comparison of cooperative milk sales (TKgPD):

Growth
Cooperative milk sale 2014-15 2015-16 2016-17 2017-18 2018-19
(%)
Hassan milk union
-Poly pak milk in union area 136.88 144.65 143.52 146.10 148.36 2.0
-Poly pak milk in Hyderabad 0.00 0.00 30.00 55.00 56.84 -
UHT milk 0.00 6.46 79.04 138.40 173.00 -
-Poly pak milk+UHT milk 135.88 151.11 252.56 339.5 387.46 29.9
Karnataka
Poly pak 3220 3344 3257 3401 3555 2.5
Poly pak + UHT 3220 3344 3257 3801 4010 5.6
Southern Region 8549 8695 8718 9616 9644 3.1
All India 31241 32128 33082 34957 35229 3.0
5. Consumer Insights

Based on the survey of 3957 consumers across rural (1773) and


urban(2184) area in Karnataka in order to obtain insights about consumers’
purchasing behavior and opinions about milk and milk products. The
questionnaire used for the survey is attached in appendix 1.

The questionnaire was designed to gather information about the milk and
products consumed in the household; frequency of purchase, quantity
purchased per purchase occasion, and source of purchase; factors
considered important in the purchase of milk and milk products; brand
currently in use; ratings for the current brand on important features etc,.

a. Frequency of purchase
Graph showing Once
Once Others
frequency of purchase Do not
a day Other
Do not a day
buy buy milk
Rural Urban milk
s
Frequency (%) (%)
Twice a day 94% 98%
Once a day 0% 1%
Twice
Do not buy milk 5% 0% Twice
a day
a day
Others 1% 1%
Rural Urban

More than 94 percent of the consumer whether rural or urban will by the
milk twice a day. In case of rural consumers about 5 percent do not buy
milk at all.

b. Type of milk bought Graph showing type of


Type Rural Urban milk brought
(%) (%) Own
Tetra Tetra
Packed produ
pak pak
milk Loose ction
Own milk
Packed milk 13% 76% produc
tion
Loose milk 46% 17%
Loose Packe
Own 39% 1% milk d milk
production
Tetra pak 2% 6%

Rural Urban

About 13 percent of rural and 76 percent of urban consumer buy packed


milk, whereas about 46 percent of rural and 17 percent of urban consumer
buy loose milk. In case of rural about 39 percent produce milk.
c. Variant of packed milk pouches
d. Importance of milk attributes Attributes Rural Urban
Variants Rural Urban (%) (%)
(%) (%) Quality of milk 35% 31%
Tonned 84% 50% Price milk 6% 10%
Full Cream 3% 6% Packing of milk 4% 6%
Double Tonned 2% 3% Fortification of milk 2% 4%
Cow milk 10% 26% Source/Place of purchase 4% 3%
Skimmed milk 0% 1% Colour of milk 8% 6%
Standard milk 0% 1% Odor of milk 10% 6%
Homogenized milk 1% 7% Taste of milk 14% 12%
Others 0% 6% Tickness 12% 11%
Brand 6% 10%
Do not get spoil 0% 0%

The tonned milk is the most preferred variant both by rural (84%) and urban
(50%) consumers, followed by cow milk with rural 10 percent and urban 26
percent.

In case of milk attributes, both rural and urban consumer feels that the
quality of the milk is most important, followed by taste and thickness.

6. Existing manpower in Marketing & Sales department:


The Union has total manpower strength of 737, of which 88 are officers, 259
are staff and 392 are workers. There are total 9 sections in the Union. The
day to day operations of the Union is looked after by a Managing Director,
who is on deputation from State Milk Federation.
The Marketing section is headed by Deputy Manager supported by four
Assistant Manager (one each for three districts and one for Hyderabad
market). Further each Assistant Manager supported by one marketing
officer. The total manpower strength in Marketing & Sales department
including one clerical staff is 16 as against approved number of 27 posts.

In addition, during 2016-17, NDDB recommended manpower of 32 for


marketing section.

7. Financials

The Union has posted a turnover of Rs. 1130 crore with a net profit of Rs.
3.31 crore during FY 2018-19. The financial performance of the union
during last 5 years is given below:
Rs in lakhs
Sl.
Particulars 2014-15 2015-16 2016-17 2017-18 2018-19
No.
1 Sales turnover 75890.17 78709.52 95758.87 96734.05 113011.05
2 Cost of purchase 69568.09 67458.75 75451.30 84235.92 88746.26
3 Net profit 188.47 161.18 423.47 391.93 331.27
4 Share capital 1361.1 1522.57 1666.89 1824.33 2018.20
5 Net worth 7077.69 12053.27 11020.47 12904.34 13175.28

During FY 2018-19, the Union released Rs. 734.11 crores to the rural
farmers (members of the union) towards cost of milk supplied. It has
immensely benefited the livelihood of rural milk producers & improved the
rural economy of Hassan, Kodugu & Chikkamangalure districts. In order to
sustain & increase the current year performance, maintaining & improving
the present sales performance is sine qua non.

8. Existing marketing system

Karnataka:

Ploy-pack Milk & Curd:

Consumer
Retailer
Consumer
Dairy Dock
Consumer
Retailer
Consumer

Commission structure: 4.25% of MRP for Milk, 8% of MRP for Curd and 10%
Butter Milk

Milk Products:
Consumer
Retailer
Consumer
Dairy Dock
Consumer
Retailer
Consumer

Consumer
Retailer
Consumer
Dairy Dock KMF Depot
Consumer
Retailer
Consumer

Commission structure:
Ghee: 11.25%
Peda: 9.0%
Khova: 10.71%
Ice cream: 36.53%

KMF Depot sales : On IUT (Inter-Union transfer rate) prices

Hyderabad market:

Ploy-pack Milk & Curd:

Consumer
Retailer
Consumer
Dairy Dock Distributor
Consumer
Retailer
Consumer

Commission structure: For milk, the distributor margin is 9.6% on MRP;


and retailer margin is 7.5%; For curd, the distributor margin is 6.6% on
MRP; and retailer margin is 8.9%
9. Competitor Analysis

The details of existing competitors for liquid milk and curd in the
operational areas are furnished below:

i. Liquid milk
Name of the brand Quantity (in Market share % Type
LLPD) 2018-19 (Coop or Private)
Hassan Milk Union Ltd. 1.60 70% Coop.
MILKY WAVE 0.03 2.12% Private
JERSEY 0.02 1.28% Private
DODLA 0.01 0.57% Private
ii. Curd
Name of the brand Quantity (in Market share % Type
LLPD) 2018-19 (Coop or Private)
Hassan Milk Union Ltd. 0.25 90% Coop.
MILKY MIST 0.07 6% Pvt.
HATSUN 0.04 4% Pvt.

Benchmarking of sales promotion expenses for the Year 2018-19


Sales Sales
Turnover Net profit promotion promotion
Name
(Cr.) (Cr.) expenses exp as % of
(Rs Cr) turnover
Hassan Milk Union 1130.11 3.31 0.15 0.013%
Mother Dairy
Amul
Hatsun Agro 4766.34 114.84 106.20 2.23%
Heritage 2482.30 83.44 0.27 0.011%

9. Market Plan:

Marketing Mix of Hassan Milk Union analyses the brand/company which


covers 5Ps (Product, Price, Place, People and Promotion) and explains the
Union marketing strategy. The article elaborates the pricing, advertising &
distribution strategies used by the company.

Product:
Hassan Milk Union is selling milk and milk products under “Nandini” brand,
which is a leading milk brand in Karnataka. The Milk Union product
portfolio mainly consists of poly-pack milk, Ultra Heat Treatment (UHT)
milk, Curd (poly-pack), Ghee and other indigenous sweets like peda, khova,
mysore- pak and ice cream in different flavours.
The SKU wise details of the product are given in annexure.
The citadel approach would be better suited for the Milk Union considering
the budget constraint. In citadel approach, brand focusses on one product
at a time. It achieves its objectives for that product and then builds the
product and so in sequence. The Union needs to focus on few of its top
selling products apart from liquid milk and not try making & selling
everything. It is important not to spread attention on too many products
considering the technical & manpower constraint. Moreover, for the local/
indigenous sweets they will have to compete with the traditional sweet-
owners/ halwais etc. who have long been into the business through
generations. Curd is easy to move into, which is equally in demand in the
neighbouring states. Ghee, flavoured milk, ice-creams are other such
products which have shown rapid growth during last 4-5 years.

The products also need to be interesting & appealing to attract new & young
customers. The packaging of the present products may not be appealing in
to children & young generation who play a crucial role in purchase decision
process. The packaging & packet size also becomes crucial owing to nuclear
family, urbanization, double income group etc. The hostel dwellers, tourists
& working women may require smaller size pack.

Price:
In Karnataka, brand development is the responsibility of the Federation.
Hence federation gets to decide the price & market for all the 14 Unions
under it. In turn, the union gives a levy of ……… to the federation.
Hassan Milk Union follows rates declared by Karnataka Milk Federation
(KMF). Govt. of Karnataka provides price incentive of Rs. 5 per liter of milk
procured by all co-operative Unions in Karnataka, which in turn is passed to
the consumers, hence the products prices for Nandini products are
comparatively lesser than its counterparts in other states/ brands.
KMF maintains a differential pricing strategy in its marketing mix and varies
according to geographical regions. The pricing & market territory is decided
by KMF.

In comparison to other brands, Nandini products are priced cheaper.


It is also found that retailers and shop keepers play a crucial part in
pushing the products. For the customers who don’t insist on buying a
particular brand, the shop keepers generally push higher margin products.
Therefore the retailers need to be carefully appointed & monitored. In
general, the retailers see themselves as agents making deliveries. They do
not see themselves as channel partners. They have to be incentivised to
monitor their performance and progress. Other factors like incentivising the
dealers, retailers & shopkeepers for leaked, expired products for milk &
fresh milk products as given by other private players may also be thought of.

Place:
In the milk industry, distribution is quite a critical part of the business. To
tap the business into various regions (Hassan, Chikmangallur and Kodagu
districts of Karnataka & Hyderabad in Telangana), it has ___ retail outlets
and ____ exclusive stores in place. As its suppliers are farmers &
cooperatives, it is able to save on other middle men costs. Since Hassan Milk
Union deals with perishable products which needs refrigeration and has
very less shelf life, it produces as per demand of the regions. After being
brought in from the Co-operatives in tankers or being collected at the
collection centres, it goes on for processing in the plants and then on it is
delivered to it Local Area Distributors. These Local Area Distributors then
send it to its retailers, convenience stores, supermarkets and other smaller
retailers. Since consumers are able to find to Hassan Milk Union booths very
close to their homes, it has built customer loyalty and preference.

With e-tailing, the experience of shopping has changed entirely. Even tier II
& III towns are shifting to e-tailing. Considering this, more app based
delivery option (like tie-up with big basket, ninja cart etc.) may be explored.

Promotion:

The Union can focus more on local channels, radios, hoardings at tourist
places with more footfalls focussing on local festivals, seasons etc. Using low
cost promotion techniques like stalls, games in haat & melas in small towns
& villages; sponsoring local events, competitions for school children; dairy
visits for school/ college children etc. Awareness campaigns on benefits of
packed liquid milk over loose milk, dangers of loose milk in terms of
hygiene, quality, etc.
Arranging programmes for housewives, school & college students’ visits to
dairy plant to be continued and scaled up.

The union needs to position its products as “empowering farmers”. In their


communication they may emphasize that around 80% of the money they pay
goes back to the famers. Flavoured milk, lassi, butter milk can be positioned
as an alternate to cold drinks.

People:

Hire marketing professionals from private sector companies on consultancy


basis and give them a product category with definite milestones. Specifically,
distribution, digital marketing, low cost brand building, creative thinking
and SMP price forecasting are the areas in which external expertise can be
sought.
10. Suggestions:

The following are the current achievement and target for next three years.

Current Target
Sl.No Details 2018-19 2019-20 2020-21 2021-22
1 No.of Delears
2 No.of Parlours
3 No.of Fanchieses

Projected Sales
No. Particulars Units 2017-18 2018- 2019-
2020-21 2021-22
(Current) 19 20
Poly pak with
1 TLPD 146.10 151.21 156.51 161.98 167.65
Union area
Poly pak in
2 TLPD 55.00 63.25 72.74 80.01 88.01
Hyderabad
Flavored milk in
3 TLPD 0.00 0.00 0.00 50.00 80.00
PET Bottle
4 UHT Milk 138.40 173.00 227.60 272.12 325.40
Overall total TLPD 339.50 387.47 456.85 564.12 661.07

To achieve the above target, it is proposed different Sales promotion


activities. It is also proposed advertisement in different media, milk and
milk products by placing hoarding/ bill boards at strategic locations of
the city and at retail outlets, brand by promoting exposure visit of
house wives, school and college students to the Union and explaining
them about benefit of pasteurised milk and milk Products.
In addition to the existing marketing and sales promotion activities,
following Strategies for increasing the sales of the Union’s milk and milk
product would be adopted, with a proposed outlay of Rs. ________ Cr.
- Expanding marketing network: To promote sales of packed
liquid milk in the existing market, the Union is planning to
appoint additional 250 retail outlets and setup 80 milk parlours in
these cities.
- Making available Visi-coolers at retail outlets: The Union
envisages equipping all retail outlets along with milk parlours with
Visi-coolers and deep freezers.
- Deep penetration: At present, some retailers are venturing into
delivery of milk to consumers’ door-step and are able to achieve
higher growth in sales of packed milk. The Union will promote
door delivery concept and give special preference to retailers who
venture into it.
- Awareness campaigns:
o Awareness campaigns on benefits of packed liquid milk over
loose milk, dangers of loose milk in terms of hygiene, quality,
etc.
o Arranging programmes for housewives, school & college
students’ visits to dairy plant to be continued and scaled up.
o Quiz competition, Essay Competition -----
-
- Visibility drives:

The Union will undertake special drives for building the brand
including bill-boards, advertisements, publicity campaigns, etc.

It is also proposed that union should stop producing Peda, Khova, Mysore
pak and concentrate more on flavored milk, Ice cream in addition to milk
and curd sale.
Growth in different products

Products CAGR (%) States


Ghee 11% GUJ, RAJ, KAR, MP, HAR

Baby food 12% GUJ

Paneer 15% GUJ, BH, PUN,DEL

UHT Milk 16% GUJ, KAR, TN, RAJ

Butter 17% GUJ

Butter Milk 21% RAJ, GUJ, KAR, AP, MP, MAH

Cheese 23% GUJ, KAR, DEL

Curd 25% KAR,GUJ, DEL, KER,PUN,MAH

Ice cream 30% GUJ, DEL, KAR, MAH

Flavoured milk 32% GUJ, DEL, KAR, MAH

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