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EXECUTIVE SUMMARY
Distribution is all about getting your product/service to right people at the
right time with special consideration for profit and effectiveness successful marketing
does not end when a business has developed a product/service and has found its
appreciate target audience with a view to selling it at the right price
Small business need to acknowledge the different typesof distribution
channels to utilize sales potential after reading the article you may learn that you
could increase sales or profit by using a different distribution channel to the one that
you currently use.
Distribution channels are influenced largely by the type and size of the
business and so some of the channels explained may not be feasible for your
particular business consequently you may the note that these channels could be
adopted in the future to accommodate for any change and to help your business grow.
Milk is only natural product that is daily used by man at regular intervals for
different purposes the national potential is ideal in quality and balanced to satisfy
human amino acid requirements the content of vitamins and minerals are unique not
only in proportion by in quality nutrients that are essential for mans growth and
development. Milk is the only article of food that fairly represents a complete diet,
and is the cheapest source of animal protein thus milk became the part of Indian food
1
MEANING / DEFINITION
Marketing has been for a long time a neglected area in India, because of
protective controls and prevalence of a seller’s market in most products. However, the
new trends as the government levels of fearing controls is bound to result in
increasing competition and a change over in many more products to a buyer’s market.
Marketing is the business function that identifies unfulfilled needs and wants
defined and measures their magnitude, determines which target markets the
organization can best serve, besides an appropriate products, services and programs to
serve these markets and calls up on everyone in the organization to “think and serve
the customer” from as a social point of view, marketing is the force, that harness a
nations industrial capacities to meet the society’s material wants.
William David observed “while great devices are invented in the laboratory,
great products are invented in the marketing departments.”
“A market consists of all the potential customers sharing a particular need or
want who might be willing and able to engage in exchange to satisfy that need or
want.”
Thus the size of the market depends up in the number of persons who exhibit
the need have resources that interest others, and are willing to offer these resources in
exchange for what they want.
DEFINITION OF MARKETING
“Marketing is a social and managerial process by which individuals groups
obtain what they need and they want through creating, offering and exchanging
products of value with others”.
“The marketing concept is a point of view on the business. It enunciates that
any business is essentially a “need satisfying process”. It also enunciates that all the
goals of the organization integrated management action and generation of consumer
satisfaction”.
----Caniff-----
2
“The aim of marketing is to make selling superfluous. The aim is to know and
understanding the customer as well as that the product or services fits….and sees
itself”.
----P.F Drucker----
“Marketing is the total system of business activities designed to plan, price,
promote and distributing want- satisfying products to target markets to achieve
organizational objectives”.
MARKETING MANAGEMENT
“Marketing management is the process of planning and executing the
conception. Pricing, Promotion and distribution of ideas, goods and services to create
exchanges that satisfy individual and organizational objectives”.
DISTRIBUTION
A major focus of channels of distribution is delivery. It is only through
distribution that public and private goods and services can be made available for use
of consumption the distribution channel over comes the time place and possession
gaps that separate goods services from those who need of want them.
3
NEED FOR THE STUDY
Model diary has a very important image of supplying good quality of milk at
reasonable price to the consumer. It has a hugged turn over and profited and some
other reasons gave birth too many private diaries as Model Diary occupies a very
important place in our state. The purpose of production is served only if the consumer
interests are attended to quality of the service rendered by Model Diary ensures the
organization regarding customer satisfaction in their product the aim of this study is to
provide an insight into the characteristics of the consumer markets indentify the
possible source dissatisfactions work towards handing complaints from consumer
which in turn help in enhancing customer satisfaction and prevent dissatisfaction .
Keeping in the view the private diaries in Krishna district milk market a
through a study of various factors include process quality availability packaging taste
usage time and so on distribution is the process of moving products from the producer
to the consumer which may involve several steps and the participations of multiple
companies as noted distribution channels often require the assistance of the others in
order for the marketer to reach its target market .Distribution channels are influenced
largely by the type and size of the business and so some of the channels explained
may not be feasible for your particular business consequently you may the note that
these channels could be adopted in the future to accommodate for any change and to
help your business grow .
4
SCOPE OF THE STUDY
Every manufacturer or marketer must aim at ultimate satisfaction of
consumers in order to ensure future survival and profitability in this context, the
factors influencing the purchase process such as quality price responsibility towards
complaints should be studied in depth in order to gauge the extent which each of these
factors affects a consumer is met is indicated by post-purchase behavior of the
consumer the post-purchase stage determines whether the customer remains loyal or
turns disloyal to brand or product purchased if his expectations of the product are in
conformity with its performance, then there is ultimate satisfaction of customer and he
remains loyal to the product. On the hand, if there are any discrepancies between the
performance of the product and his expectations then there is bound to be in
dissatisfaction and dissonance this dissatisfaction would lead to disastrous
consequences to the marketer as he would not only lose out on the dissatisfied
customer but would also have to face the worth of negative word of mouth publicity
5
OBJECTIVES OF THE STUDY
To study the customer satisfaction levels with respects to availability of model
dairy products.
To study the different type of distribution channels used by the company to
meet the Expectations of customers and their needs
To understand the criteria of selection of agents in model diary
To measure the effectiveness of distribution channels of model diary achieving
overall objectives.
To evaluate the cost effectiveness of maintaining the distribution channel.
6
RESEARCH METHODOLOGY
Research methodology is a way of systematically solving the research
problem it may be understood as a science of studying how research is done
scientifically the researchers study the various steps that are generally adopted in
studying the research problem along with the logic behind it
COLLECTION OF DATA
Fact expressed in quantitative from can be termed as "data". Data may be
classified either as "primary data" or "Secondary ".
PRIMARY DATA
The primary data is the data gathered by the researcher for the specific
purpose of research situation at hand it is the first hand information that researchers
gets from various sources like respondents, analogues case situation and research
experiments or the primary data has been collected from the distribution by supplying
them the questions from the customer.
SECONDARY DATA
Secondary data are already published data collected from some purpose other
than one confronting the researcher at a given point of time the secondary data can be
gathered from various sources like books journal, news papers reports of the
company, websites etc..,
SOURCE OF DATA
After the objective has been stated clearly, the next task was to collect relevant
data regarding the research study the data regarding the Indian and international diary
scenario were collected from the internet and other relevant data were also collected
from internet all through there were some data from newspaper and magazines but
the major portion was given by the company i.e. the assistant manager of the
respective departments. So the primary data involved data collected from milk booth
and from few consumers.
7
DATA COLLECTION INSTRUMENT
The basic instrument used in collecting the data in this survey is the
questionnaire. Apart from that we had also gone through the record of the company
the data collection from the above includes
Data regarding model diary.
Data regarding the highest selling product.
Data regarding the contribution of each product towards sales.
Data regarding total sales and market shares of model diary.
Data regarding the distribution system of the MODEL DAIRY.
Sample size:
Population: finite (approx-15000)
Sample size: 155 members
AREAS OF THE STUDY
DATA: The area of the study has been confined to certain areas of Vijayawada city
only the areas of study include...
Padamata Lanka
Krishna Lanka
Nidamanuru
One Town.
Bhavanipuram.
Ibhrahimpatnam.
Kondapali.
8
LIMITATIONS OF THE STUDY
In spite of honest and sincere efforts by the researcher there are bound to be
certain discrepancies and inconsistencies again there were several Limitation both
statistical and non statistical within which there research has been carried out. Some
of the Limitation
1. The whole research study was carried out in Vijayawada only therefore the
result may not be same in zonal basis.
2. It was very difficult to generalize the main finding as the sample size was very
Small
3. Some of the finding has been taken in the research are based on the opinion,
Attitudes, feelings and perceptions of few respondents, but the respondents
were not willing to share their opinions and presumption, due to their busy
schedule.
4. Time, and the study period is another major contrasting factor.
9
INDUSTRY SCENARIO
Dairying has been of life in India since the ancient times. The modern diary
industry took roots in 1950 with the sale of bottled milk in Bombay from Array milk
colony. The first large scale milk products factory was started in 1945 at Co-operative
venture, with the assistance of UNICEF, for the production of milk powder, table
butter and ghee. These products were making from the buffalo milk.
India is the largest producer of milk in the world and dairy farming in the
single largest contributor to India’s GDP a part from being the biggest source of
employment. Dairy farming is a critical part of the Indian economy as it’s importance
stems from three important stems from three important factors .First of all it provides
income for small and marginalized farmers: second ,milk and its products are a
critical part of our diet and third dairy farming complements other forms of
agricultural activity.
India has been largest milk producer in the world since 1988 and milk
production has consistently improved over the past two decades. The production milk
in 2010 was estimated to be 117 million tones and increased approximately 4% to a
record 121.5 million tons in 2011.
The world’s largest development program over undertaken, the operation
flood undertook and gigantic task of upgrading and modernizing with production,
procurement, processing and marketing with the assistance provided by the world
bank and other external agencies, designed and implemented by the National Diary
Development Board (NDDB) and the Indian Diary Corporation. The project was
launched in July, 1970. Its basic concept compromises the establishment of co-
operative structure
OPERATION FLOOD – 1
Operation flood also referred to as `white revolution is a gigantic project,
propounded by the Government of India for developing dairy industry in the country.
The Operation Flood-2 originally mean to be completed in 1975 actually took the
period of about 9 years from 1970 to 79 for its completion at a total cost of about a
10
Rs. 116 Cores. The operation flood-I was wholly finance any selling in India free gifts
of 1, 26,000 Metric tons at skin milk powder and 42,000 Metric Tons of Buffer Oil
donated out of the surplus of European economic community.
ANANDPATTERN – 1
Under the operation Flood -1 the program for increasing milk production was
taken up in ice hinter lands of various breading tracks on Anand pattern and loudly
proclaimed with a trample. The Co – operative were started originally in 18 of Indian
Milk shed districts and later on mine more milk shed areas were added to make a total
of 27 in 10 states of the country viz., Maharashtra Tamilnadu, Andhra Pradesh, West
Bengal, Bihar, Haryana, Punjab, Uttar Pradesh and Rajasthan.
Those dairy Co – operatives are based on the model known as Anand pattern
of dairy Co – operative. Under Anand Pattern concept rural Co – operative
infrastructure was to be built in the village, the milk products were to form their
animals. In each participating village, the milk products were to form their own
village diary Co – operative. Thus Anand pattern diary co – operative union organizes
mobile veterinary and artificial insemination counters.
In the sphere of Co – operativisation the No. of Anand pattern organized
societies under operation flood was 63121 on April 1st 1991 as age INST 60753 a year
ago indicate one that years as many as 2368 new diary co – operatives were found.
OPERATION FLOOD – 2
The operation flood-2 that started that in July 1978 is scheduled to be
completed in 1985 at a cost Rs. 483 cores. A humble attempt has been made to
present a general appraisal of the achievements made in same sufficient fields during
Operation Flood-I. These achievements if at as all made particularly the Anand
Pattern Dairy Co-operative unions are to serve now as bedrock of operation flood-2.
These unions are to act as the starting nuclear for Co-operative charter federation, the
main instrument for the gigantic project flood-2. The average nuclear charter
federation world in 6 Districts Unions registered and unregistered.
The Indian Dairy corporation, National Dairy Development Board being
autonomy National Institutional probable are not required to indicate the basis on
11
which state with allocations were made in Operation Flood-I up to end of the 1979,
Gujarat State alone Government the lines shares of 1666.5 lakhs against 5 states
Haryana, Bihar, Rajasthan and Andhra Pradesh put together the total disbursement in
their case was 1732 lakhs only. This trend is going to be nationalized in Operation
Flood-2.
OPERATION FLOOD – 3
The Indian Dairy Industry is growing rapidly and may become a strong
competitor to World Dairy powder. The milk sector is the second largest contribution
to the agricultural economy in terms of produce. The Phenomenal growth is a result of
the National Dairy Development Board through Operation Flood Programme.
Operation Flood-3 now in this closing position consolidated the procurement
efforts to boost production. The projection for milk output for 2000 A.D., is nearly 90
million tone at a 5% growth rate. It is now 5 to 8 percent Dairy Factories established
under Operation Flood, which covers 170 milk Co-operative societies. They have a
milk drying component of about 697 Tones powder. In 1990-91 the Co-operatives
collectively nearly 10 million Liters and marketed 8 million Liters of Liquid milk
per day.
The operation flood being implemented by the National Dairy development
Board aims to enhance the average milk procurement to 13.7 Million Kilograms per
day by the year 1996 the concluding year of the operation flood 3 program. The peak
procurement level curing the period is expected to means 18.3 Million Kilograms
packed. The compulsive line figure for both during 1987 the base year of the
Operation flood program to was respectively 8.5 and 11.2 mkg-pd efforts are also
being made to increase capabilities of milk and production of milk powder.
Under the operation flood improving Animal Health case and good breeding
natural making available quality fodder under and incurring area and farm fertilization
under Co-operatives and processing were added. Inventory and animals has broadly
and Dairying from 1950 to 90 was 2.864 Cores achieve of all occasion to the
Operation Flood. The rapid growth in milk production did away with import of milk
powder except for a small quality (26.400 tones) during the drought years.
12
WORLD PRODUCTION
The world’s milk produce comprises cow’s milk, buffalo milk and milk from
sheep, goat and other animals. The worlds total milk production from all these sources
in 2009 was 703.350 million tones which was a considerable jump from 697.573
million tons in 2008 As far as cow’s milk production is concerned use ranks first
followed by India , china the Russian federation brazil and Germany respectively. The
world’s cow milk output in 2009 was 85.86 million tones of which use’s share was
85.86 million tones and India’s share was 45.14 million tones.
On the other hand regarding the worlds buffalo milk output, India ranks first
with a production of 59.87 million tons in 2009 followed by Pakistan, china, Egypt,
and Iran respectively. The worlds total output of buffalo milk in 2009 was 89.86
million tones.
CURRENT DAIRYING SCENE IN INDIA
The dairy industry in India made rapid progress, particularly during the last
two decades. Today, India occupies first position in milk production in the world,
surpassing the US. The credit, no doubt, goes to operation Flood, which has played a
key role in the development of Dairying. India is a milk consuming nation. This,
couples with our large population ensured steady increase in demand for milk.
The employment potential of Indian dairy sector is substantial. This sector
provides additional income and generates job opportunities for 80 million farmer
families. More than 70 per cent of marginal farmers and landless laborers maintain
dairy animals to supplement their incomes.
In India, there are 10.1 million farmers who are members of 77,000 village
dairy Co-operative societies, each of which is affiliated to one of 170 district and
regional Co-operative unions which in turn are part of a state Co-operative marketing
federation. There are 22 of these federations, which offer dairy and other products in
the market successfully while competing among themselves. At present, dairy farms
are owned by individuals, investors and multinationals.
13
The Co-operative sector has contributed significantly for the success of white
revolution in India. There are Co-operative more than 97,000 milk Co-operative
societies in 264 districts. This sector grows at the rate of 6.5 per cent annum.
ADVANTAGES OF INDIAN DAIRY INDUSTRY
In terms of total bovine population, India occupies the first position on the
world, with 176.7 million cattle and buffaloes. (World’s total bovine population is
1,420 million). A large bovine population, strong procurement infrastructure,
presence of highly skilled manpower, cheaper labor, and a large number of processing
and allied facilities are some of the advantages that the India dairy business has.
PRODUCTION TRENDS
Production of milk rose from 20.7 million tons in 2006-07 to 8.3 million tons in
2007-08. However, 45 per cent of the total milk is still handled by the traditional
sector. In 2006, 77 million buffaloes produced about 50 percent of the total milk
production in the country. In the same year, about 200 million cows produced about
45 per cent of the total milk production. (Nearly 156 million goats, sheep etc produce
only about 5 per cent of the total milk output.)
EXPORT POTENTIAL
India is not fully utilizing its export potential in respect of dairy products. The
cost of milk production in India is the lowest. And the dairy industry is not getting
any subsidy. There is an urgent need to pay special attention to quality of India has to
compete with other countries. At present, the country is exporting malted milk foods,
ghee, butter and cheese to countries like Bangladesh, UAE, Nepal, Sri Lanka, Oman
and Bahrain. Of course world milk prices are subject to dramatic fluctuations. Export
earnings from the live stock sector and related products rose to Rs.19, 250 million in
2007-2008 from Rs. 7,920 million in 2006-07.
DISAPPOINTING FACTS
Milk availability in India is still low at 212 grams/day per person. Of course, the
per capita availability of milk in the rural areas is barely 121 grams/day as compared
to 400 grams/day in urban areas.
14
Animal productivity remains low, as the national average is only 1.5 lit/day.
Productivity of Indian cattle is 10 per cent of the productivity of cattle in Israel and 30
per cent of the level achieved by the developed countries. Unless milk productivity is
raised, it is difficult to compete with Europe, America and Oceania.
What is more, only 10 per cent of the milk produced is in the organized sector,
leaving the remaining portion in the hands of milkmen thus providing chances for
adulteration and exploitation. Also, our cattle and buffaloes are slow maturing, show
irregular cycling behavior, produce fewer claves in their life-time, and suffer from
physical and physiological anomalies in reproduction.
There is a serious shortage of conventional feeds for feeding livestock. Both
quantitatively and qualitatively, there exists a wide gap in demand and availability of
fodder resources in India. During the last two decades, there has been no change in
the cultivated area devoted to fodder. It still stands at 4.4 per cent of the total cropped
area. It is estimated that 10 to 15 per cent increases can be recorded in the existing
milk production through adequate feeding of bovine population. In order to solve feed
shortage problem, we have to rely on cheap alternative feed to growing calves.
STEPS TAKEN SO FAR
The problem of low productivity of animals can be solved by ensuring
availability of feed and fodder. Concrete efforts are needed to improve the
productivity of fodder crops, develop grazing land, and promote agro-forestry systems
like silvipasture and research on low-cost feed items. Extensive research has been
carried out to find out the utility of items like apple ground nut hulls, milk cake,
neem cake, salad meal, soya pulp, rice bran and brewery waste.
On June 9, 1992, the Govt., of India issued an order under section 3 of the
essential commodities Act, 1955. According to this order, known as Milk and Milk
Products Order (MMPO) 1992, milk does not have to mean just cow or buffalo milk,
it could also be goat milk or even a mixture of the three. The various objectives of
MMPO include:
15
Facilitating supply or availability of milk by balancing uneven supplies in
different regions.
Maintenance and increase of milk production and supplies and ensuring
equitable distribution.
Establishment of proper standards and norms for control in handling milk and
milk products.
Establishment, promotion or registration of any industry related to milk or
milk products.
Such other objectives incidental to the effective implementation of the
MMPO.
The milk unions are urging the government to either ban OGL imports of
skimmed milk powder (SMP) or impose duty on the same. They argue that prices of
imported powder should be at par with those of the domestic products.
The price of skimmed milk powder is coming down under pressure from
imports. It is said that levying of minimum import duty of 35 per cent of SMP would
provide a level playing field to the producers. (India gets about 5,000 tons of imported
milk powder annually).
LATEST DEVELOPMENT IN THE DAIRY SECTOR
Formation of new dairy Co-operatives in Operation flood areas to bring 3.5
million members under the Co-operative fold in addition to the 9 million
members now being served by dairy Co-operatives.
Providing vocational opportunities and fostering entrepreneurship among
dairy-science student trainees to equip them with knowledge and experience
so that they may take up dairying as a profession.
TOP MOST PRIORITY
In the livestock sector, productivity holds the key. The major thrust should be
on genetic up gradation to improve productivity and production. Of course, priority
should be given to infrastructure development, feed management and better health
care services
16
CURRENT SCENARIO
Of the total milk output, the organized sector still handles an estimated output
of 12% only despite vigorous dairy development activities. At present there are 25.2
dairy plants in the public and Co-operative sectors including pilot dairies with an
average output of 12.2 million liters. The milk market covers 528 major towns, 4
metros and 149 class one and 375 smaller towns.
About 300 million supply every day. The milk production enhancement units
are being adequately strengthened. The Indian of Agriculture Research and the
“National Dairy Development Board” are mounting massive efforts to integrate dairy
science research, education, extension and development.
Federation that was guided by “National Co-operative Dairy Federation of
India”. The apex body of milk Co-operative societies. A national wide network
system of “Multi tier producers Co-operative” which are domestic in structural and
are professionally managed has been established. At present this program is providing
a joint additional income of Rs. 1200 cores from milk. It is heartening to note that the
Dairy equipment industry has grown to such an extent that most of Dairy Industry
needs are met indigenously.
TECHNOLOGY MISSION
The operation flood program prepared the ground for launching another
massive program at the national level called “Technology Mission on Dairy
Development (TMDD) on June 11, 1988. The main objective is to accelerate the pace
of growth of dairy industry in India. To achieve this end, the operation flood programs
such as the dairy research programs processing technology and product manufacturing
etc. the mission operation areas has covered approximately 60% of the country by
1995. The mission will functions through the adoption of locating specific strategies
such as people’s participation, demonstration of excellence, better land management
cost effective handling and processing system and intensive marketing.
17
DAIRY PROCESSION TECHNOLOGY
Research studies in dairy technology in NDRI Karnal have led to the
development of purely vegetarian processed cheese, a synthetic ghee flavor and Ghee
making plant on the principle of Hydrodynamics and Heat transfer in horizontal thin
scalped surface heat exchanges with a capacity to handle 500-600 kg an hour of
creamy butter. A two-fold increase in shelf life in cheese was attained. The methods
of manufacturing griehand cheese spreads of various flavors etc., have been
successfully developed by NDDB.
GROWTH IN CO-OPERATIVE
In order to build a viable and self sustaining National Dairy Industry on Co-
operative lined NDDB launched a project christened “Operation Flood” in 1970.
Funds mobilized from sale of products based on foreign food with its development
program It spurred Indian Dairy industry launch a “White revolution”.
In sphere of Co-operatives the number of Anand pattern organized societies
under operation flood were 63,121 till date and in next year, as many as produced and
sold by these Co-operative fetched approximately up to 1000 cores per year.
Beside the studies in milk the “operation flood” program has achieved success
on other fronts also. Import of milk solids has been already ended and India recently
exported 30,000 tons of milk powder. India is in the way of attaining total self-
reliance and next self sufficiency in milk production.
MAJOR DAIRY PRODUCTS AND BRANDS
COMPANY BRANDS MAJOR PRODUCTS
Nestle Milk – Maid,
Cerelac Lactogen,
Milo & Everyday
Sweet Condensed Milk
powder, Malted food, milk
powder & dairy whitener,
Ghee & Ice Cream.
Mild Foods Limited Milk Food Ghee & Ice Cream
Cadbury Bourn Vita Infant Milk Food,
Malted Milk Food.
18
NATIONAL DAIRY DEVELOPMENT BOARD (NDDB)
At the time of Industrialization at cattle feed factory at Kajarie in October
1964 the late Sri LALBAHADUR SASTRY, the prime Minister of India paid
unscheduled visits producers co – operative societies and stated there overnight. He
was impressed by the social economic changes brought milk co – operatives in
Krishna district and desired to have a national level organization to milk producer’s
co – operative societies replicateanansin other part of the country.
Thus the National Dairy Development Board was sent up under the
empowerment of Ministry of Agriculture and Irrigation. Govt. of India in September
1965 under the society Regulation act 1860 and the Bombay trusts act 1950. The
president of India nominates the Board of Directors including Chairman, Secretary,
and National Dairy Development Board in the chief of the organization.
ANAND PATTERAN DAIRY DEVELOPMENT
The information Anand pattern of milk co – operative was launched with the
organization of Krishna District Co – operative Milk Producers Union Limited. In this
pattern the function of dairy is milk procurement, processing and marketing are
controlled by the milk products themselves.
19
INSTALLAED PROCESSING CAPACITIES
S. No.Name of the
Dairy
Milk
ProcessingPowder Mfg
Butter
Mfg
Ghee
MfgU. H. T.
1 Visakha Dairy 300 13 - 8 50
2 Rajahmundry 150 - - 4 -
3 Vijayawada 250 22 12 25 -
4 Ongole Dairy 300 30 8 10 -
5 Nellore Dairy 75 - - 4 -
6 Chittor MPF 200 14 - 8 -
7 Nandhyal MPF 150 10 - 4 -
8 Hyderabad 250 12 - 8 30
9Mother Dairy
Hayatnagar200 - 4 4 -
10 Other Dairies 249 - - - -
DAIRY INDUSTRY IN ANDHRA PRADESH
The program Dairy Industry was mooted with commendable help of the
United National International Children’s Emergency Fund, Food and Agriculture
Organization and Freedom from Hunger Company Campaign Organization of the
U.K. these organization insisted a lot of the establishment of the dairy units at Hydria
and Vijayawada in 1967 and 1969 respectively, which lead to pioneer dairy
development in Andhra Pradesh later to set cooling and chilling centers have been
setup to feed these two gigantic units.
20
The Government of Andhra Pradesh started dairy development corporation to
interest of milk producers and ensuring adequate supply of fresh milk at reasonable
price to the urban consumers as A. P. D. D. C., come in to the existence on 2nd April
1974. A. P. D. D. C., providing employment to nearly 20 employees and organism
easy many as 87 dairy units including seven milk factories, 13 district dairies, 22
chilling centers, 18 cooling centre and 15 mini cooling centers.
In addition to that the private units have been contributing their little mite in
the development of dairy industry M/s. Hindustan milk foods that has started a malted
milk product factory in Rajahmundry. Further to enhance working efficiency and to
increase the turnover, the Government has constituted on autonomous dairy
development. Corporation on the recommendation measure the dairy industry
improving towards massive milk production and milk collections.
DAIRY DEVELOPMENT
In 1960 pilot milk supply scheme was started in the state for the dairy
development, its initial capacity was 100 liters a day in the time of starting. Now its
daily collection increased to 11 lakhs liters per day. It is also working as alien
between milk producers of the towns by providing reasonable price to the producers
to maintain stable market.
A. P. DAIRY DEVELOPMENT CO – OPERATIVE FEDERATION (A. P. D. D.
C. F.)
A. P. D. D. C. F. was formed in October, 1981 to implement Operation Flood
– 2 programs through active involvement of producers in organization milk
production, procurements, processing and marketing on “three – tier”, Co – operative
structure as per the National Government of India. The three –tier system consists of
primary dairy co – operatives societies 13 village level, co – operative unions at
district level and federation at state level.
21
OPERATION FLOOD
In our state operation flood was divided in three types “Anand Level”.
1. Village Level – D. C. S.
2. District Level – 13
OPERATION FLOOD PROGRAMME
Indian dairy Development Corporation own the responsibility of
implementation of operation flood programs, which provides money assistance, put
70% towards loans and 30% as subsidy. National Dairy Development Corporation
selected district of the State for implementation of operation fold.
DISTRICT SELECTED UNDER OPERATIONS
22
District Milk sheds / unions
Krishna Krishna
Srikakulam Vishaka
Vijayanagaram Vishaka
Vishakapatnam Vishaka
East Godavari Godavari
West Godavari Godavari
Chitoor Chitoor
Kurnool Kurnool
Cuddapah Cuddapah
Nalgonda Nalgonda
Rangareddy Rangareddy
APDCF RECENT TRENDS
Even though Andhra Pradesh is the second largest milk producing State in
India, (after Uttar Pradesh) the dairy sector in the State still offers significant
opportunities for entrepreneurs and farmers to set up units.
While the State produced about 112.5 lakh tonnes (lt) of milk last year, with
an annual growth rate of 6.5 per cent, the State Government, bankers and existing
players in this sector feel that there is still a significant gap between supply and
demand.
While the State Government has unfurled a Rs 6,200-crore State Milk Mission
up to 2015, banks, prominently NABARD, State Bank of Hyderabad and Andhra
Bank, are gearing up to provide easier access to funding for prospective
entrepreneurs.
One area of concern, however, is the persistent lower levels of milk yield per
animal, accentuated by factors such as fodder scarcity, inadequate veterinary support
and lack of professional management.
From a broader perspective, the State is endowed with rich livestock
resources, having 255 lakh sheep valued at Rs 2,550 crore, 133 lakh buffaloes (Rs
13,300 crore) and 112 lakh cattle (Rs 11,200 crore).
UNTAPPED POTENTIAL
“However there are still vast areas of untapped potential in the livestock
sector,” says Dr M.V. Reddy, Director of State Animal Husbandry Department. For
instance, the productivity of a buffaloes is at 4 kg per animal, while the potential is 6
kg. In other words, while the current production is 76 lt, the potential is 150 lt.
It has been projected that there are adequate entrepreneurship opportunities
available in dairy-related areas such as male calf farming, milk chilling and
processing, bio-gas plants, dairy products, fodder production, pharmaceuticals and
consultancy. The State Government is promoting about 9,000 mini dairy units with
23
five milch animals each in the current fiscal through 25 per cent subsidy on each
animal.
FINANCING
Mr P. Mohanaiah, Nabard Chief General Manager, Hyderabad, said the bank
had received about 17,000 claims from prospective dairy entrepreneurs so far this
fiscal, out of which 14,000 have been cleared and Rs 14 crore worth subsidy already
released.
What makes banks more inclined towards financing of diary activity? The
State has over 13 lakh self help groups that are linked through bank finance to the
tune of Rs 13,719 crore. Most of the groups have been opting for dairying in their
micro credit plan and an average more than 60 per cent of the financing is done for
milch cattle rearing.
24
SELECTING THE ANIMAL TO FARM WITH – COWS V/S. BUFFALOES
Cows Buffaloes
Good quality cows are available in the
market and it cost around Rs. 1200 to Rs.
1500 per liter of milk production per day.
(e.g. Cost of a cow producing 10 liter of
Milk per day will be between Rs. 12,000
to Rs. 15,000).
In India, we have good buffalo breeds
like Murrah and Mehsana, which are
suitable for commercial dairy farm.
if proper care is given, cows breed
regularly giving one calf every 13 – 14
month interval.
Buffalo milk has more demand for
making butter and butter oil (Ghee), as fat
percentage in milk is higher then cow.
Buffalo milk is also preferred for making
tea, a welcoming drink in common Indian
household.
They are more docile and can be handled
easily. Good milk yielding cross breeds
(Holsteing and Jersey crosses) has well
adapted to Indian climate.
Buffaloes can be maintained on more
fibrous crop residues, hence scope for
reducing feed cost.
The fat percentage of cow’s milk varies
from 3-5.5%and is lower then buiffaloes.
Buffaloes largely mature late and give
birth to calves at 16 to 18 months
interval. Male calves fetch little value.
Buffaloes need cooling facility e.g.
wallowing tank or showers / foggers with
fan.
25
WORLDS MILK OUTPUT BY ANIMAL
Out of worlds combined milk output cow’s milk represented 84% in 2009
followed by 13%taken up by buffalo milk 2.2% by goat milk 1.3% by sheep and 0.2%
by camel.
In recent years cow’s milk production has been declined in many parts of the
world like the European Union, USA, Australia, Japan, and china. On the other hand
buffalo milk has kept increasing. Of the total buffalo milk output, more than 90% is
produced by India and Pakistan. As far as milk from other animals is concerned
according to fao data for 2010 goat milk was mainly produced in Asia, 21% in Africa
and 15% in Europe. Regarding sheep milk production Asia’s share is 46% and Europe
share is 34% while for camel milk Africa’s share is 89% of the world countries.
The following tables will give the milk production by animal.
TOP 10 COW MILK PRODUCING COUNTRIES IN 2010
COUNTRYPRODUCTION(TONNES)
USA 8,58,59,400
INDIA 4,51,40,000
CHINA 3,55,09,831
BRAZIL 2,91,12,000
GERMANY 2,79,38,000
FRANCE 2,33,41,000
NEW ZEALAND 1,54,00,000
UK 1,32,36,500
POLAND 1,24,47,200
26
WORLD BUFFALO MILK PRODUCTION IN 2010
COUNTRY PRODUCTION(TONNES)
INDIA 59,874
PAKISTAN 22,279
CHINA 3,000
IRAN 240
MILK PRODUCTION IN INDIA
Dairy farming alleviates poverty and un employment, especially in rural
areas .According it has been growing over the years. The total volume of milk
produced grew more than seven times from 17million tones in 1950-51 to 11603
million tons in 2010-11 . This tremendous rise in production is primarily the result of
the dairy farming policy that was implemented in operation flood.
The major milk producing states are Uttar Pradesh, Andhra Pradesh, Rajasthan, and
Madhyapradesh.
WORLDS MILK PRODUCTION BY ANIMAL
Type of milk 2009 2010
ANIMAL
GROWTH(2009-
2010
COW MILK 584.164 58.464 +0.6%
BUFFALO MILK 87.291 89.960 +3.1%
GOAT MILK 15.412 15.333 -0.5%
SHEEP MILK 9.070 8.975 -1.0%
OTHER 1.636 1.636 +0.0%
WORLD
PRODUCTION697.573 703.350 +0.8%
27
STATE WISE MIL PRODUCTION IN 2010-2011
STATES COW
MILK
BUFFALO
MILK
GOAT
MILK
TOTAL
UTTAR PRADESH 3575 13902 1159 20203
ANDHRA
PRADESH
1029 7601 0.1 10429
RAJASTHAN 2320 5840 1007 9548
PUNJAB 273 6323 44 9389
GUJARAT 1912 5285 231 8844
MAHARASTRA 1155 3355 282 7679
MADHYAPRADES
H
2548 3758 417 7167
BIHAR 2023 2807 219 6124
HARYANA 376 5020 61 6006
TAMILNADU 789 761 --- 5778
TOTAL 22467 59201 3910 112540
PER CAPITAL AVAILABILITY OF MILK
Per capita availability of milk in India 2009-2010 was 263gm per day . This
per capita availability as 130 gm per day during 1950-51. It has been increasing
gradually over the past decades though it is still lower than the worlds average of 29.4
gm per day.
In the marketing of milk and its products dairy cooperatives account for a
major share of processed milk. Milk is processed and marketed by 177 milk
producer’s cooperative milk marketing federations.
In 2009-10 the average daily cooperative milk marketing output stood at 21.12
million liters with an annual growth of about 6.2% over the previous five years . This
organized sector currently handles this volume in over 400 dairy plants.
Mother dairy one of the world largest liquid milk plants is located in Delhi and
handles over 800000 liters of milk every day.
28
Over the years brands created by cooperation’s have become synonymous
with quality and value AMUL, VIJAYA, VERKA, SARAS, NANDHINI, MILMA
AND GOKUL are among those that have earned the customers trust across India.
EXPORTS
India exports skimmed milk powder whole milk powder, ghee, butter, cheese,
condensed milk, milk food for babies, milk and cream in powder, butter milk, etc.
These exports of dairy products are shown in below table for the year 2009-2010.
PRODUCT QUANTITY(MILLION
TONNES)
VALUE(MILLIONS)
SKIMMEDMILK
POWDER
12173.50 1370.515
OTHER GHEE 3084.23 721.886
BUTTER 1275.52 199.899
MILK&CREAM OF A
FAT CONTENT BY
WEIGHT 1%
5176.45 150.940
WHOLE MILK 679.10 107.106
OTHER CHEESE 450.89 78.729
OTHER MILK FOR
BABIES
172.88 47.590
OTHER BUTTER OIL 214.18 35945
IMPORTS
Even though India ranks first in the world in the production of milk it imports
some milk products like skimmed milk powder, milk and cream, buttermilk, whey,
cheese and curd.
A SUGGESTION TO HELP YOU IN DECIDING THE ANIMAL TO FARM
WITH
29
Middle class health – conscious Indian families prefer low fat milk for
consumption as liquid milk. We suggest you to go for a commercial farm of mixed
type. (Cross breed, cows and buffaloes kept in separate rows under one shed).
Conduct a thorough study of the immediate market where you are planning to market
your milk you can mix milk from both type of animals and sold as per need of the
market. Hotels and some general customers (can be around 30%) prefer pure buffalo
milk. Hospitals, sanitariums prefer cow’s milk
A GLANCE AT THE INFRASTRUCTURE AND MANPOWER
REQUIREMENTS
The space required per animal should be 40sq.ft in shed and 80sq.ft open space.
Besides, you will also need:
1. One room 10”x 10” for keeping implements.
2. One room 10”x 12” for milk storage
3. Office cum living room of suitable size.
4. Water tank capable of storing minimum 2000 liters
5. Bore well with capacity to fill water tank in 1 hr
Total land requirement for a unit of 20 animals can be sited as 3000sq.ft. There
should be space for expansion. Ideal space requirement for 100 animals is 13,000 to
15,000sq.ft (120”x 125”). For 20 animals initially, you can make contractual
arrangements for getting an assured supply of 300kgs, of Lucerne and 400 kgs. Of
maize fodders per day.
However, in long run, as the strength of you farm will go up to 100 animals, it is
advisable that you should go for a lease land of 15 to 20 acres with irrigation facility
to cultivate green fodder for your animals. (one acre of green fodder cultivation for
every five animals is required as a thumb rule.) The economics of whole dairy animal
management depends upon its economic feeding. By making fodders like Lucerne or
Berseem available for your animals you can reduce cost on feeding concentrate feed.
The strength of laborers in your farm can vary with number of animals usually the
thumb rule is one labor for every 10 animals on milk or 20 dry animals or 20 young
stock.
30
Why do Dairy Farming?
Dairying is an important source of subsidiary income to small/marginal
farmers and agricultural laborers. The manure from animals provides a good source of
organic matter for improving soil fertility and crop yields. The gober gas from the
dung is used as fuel for domestic purposes as also for running engines for drawing
water from well. The surplus fodder and agricultural by – products are gainfully
utilized for feeding the animals. Almost all draught power for farm operations and
transportation is supplied by bullocks. Since agriculture is mostly seasonal, there is a
possibility of finding employment throughout the year for many persons through dairy
farming. Thus, dairy also provides employment throughout the year. The main
beneficiaries of dairy programmers are small/marginal farmers and landless laborers.
A farmer can earn a gross surplus of about Rs. 12,000 per year from a unit consisting
of 2 milking buffaloes.
The capital investment required for purchase of 2 buffaloes is Rs. 18,223/-.
Even after paying a sum of Rs.4294/- per annum towards repayment of the loan and
interest the farmer can earn a net surplus of Rs. 6000 – 9000/- approximately per year.
(For details see model scheme enclosed). Even more profits can be earned depending
upon the breed of animal, managerial skills and marketing potential.
According to World Bank estimates about 75 percent of India’s 940 million
people are in 5.87 million villages, cultivating over 145 million hectares of cropland.
Average farm size is about 1.66 hectares. Among 70 million rural households, 42
percent operate up to 2 hectares and 37 percent are landless households. These
landless and small farmers have in their possessions 53 percent of the animals and
produce 51 percent of the milk. Thus, small/marginal farmers and land less
agricultural laborers’ play a very important role in milk production of the country.
Dairy farming can also be taken up as a main occupation around big urban centers
where the demand for milk is high.
SCOPE FOR DAIRY FARMING AND ITS NATIONAL IMPORTANCE
The total milk production in the country for the year 2001-02 was estimated at
84.6 million metric tons. At this production the per capita availability was to be 226
31
grams per day against the minimum requirement of 250 grams per day as
recommended by ICMR. Thus, there is a tremendous scope/potential for increasing
the milk production.
The population of breeding cows and buffaloes in milk over 3 years of age
was 62.6 million and 42.4 million, respectively (1992 census)
Central and State governments are giving considerable financial assistance for
creating infrastructure facilities for milk production. The ninth plan outlay on Animal
Husbandry and Dairying was Rs. 2345 crores.
FINANCIAL ASSISTANCE AVAILABLE FROM BANKS/ NABARD FOR
DAIRY FARMING
NABARD is an apex institution for all matters relating to policy, planning and
operation in the field of agricultural credit. It promotes development through
formulation and appraisal of projects through a well organized t\Technical Services
Department at the Head Office and Technical Cells at each of the Regional offices.
Loan from banks with refinance facility from NABARD is available for
starting dairy farming. For obtaining bank loan, the farmers should apply to the
nearest branch of a commercial or co-operative Bank in their area in the prescribed
application for which is available in the branches of financing banks. The Technical
Officer attached to or the Manager of the bank can help/give guidance to the farmers
in preparing the project report to obtain bank loan.
For dairy schemes with very large outlays, detailed reports will have to be
prepared. The items of finance would include capital asset items such as purchase of
milk animals, construction of sheds, purchase of equipments etc. the feeding cost
during the initial period of one/two months is capitalized and given as term loan.
Facilities such as cost of land development, fencing, and digging of well,
commissioning of diesel engine/pump set, electricity connections, essential servants’
quarters, godown, transports vehicle, milk processing facilities etc. can be considered
for loan. Cost of land is no considered for loan. However, if land is purchased for
32
setting up a dairy farm, its cost can be treated as party’s margin up to 10% of the total
cost of project.
SCHEME FORMULATION FOR BANK LOAN
A Scheme can be prepared by a beneficiary after consulting local technical
persons of State animal husbandry department, DRADA, SLPP etc., dairy co-
operative society/union/federation/commercial dairy farmers. If possible, the
beneficiaries should also visit progressive dairy farmers and
government/military/agricultural university dairy farm in the vicinity and discuss the
profitability of dairy farming. A good practical training and experience in dairy
farming will be highly desirable.
The dairy co-operative societies established in the villages as result of efforts
by the Dairy Development Department of State Government and National Dairy
Development Board would provide all supporting facilities particularly marketing of
fluid milk. Nearness of dairy farm to such a society, veterinary aid centre, artificial
insemination centre should be ensured. There is a good demand for milk, if the dairy
farm is located near urban centre.
The scheme should include information on land, livestock markets,
availability of water, feeds, fodders, veterinary aid, breeding facilities, marketing
aspects, training facilities, experience of the farmer and the type of assistance
available from State Government, dairy society/union/federation.
The scheme should also include information on the number of and types of
animals to purchased their breeds, production performance, cost and other relevant
input and output costs with their description. Based on this, the total cost of the
project, margin money to be provided by the beneficiary, requirement of bank loan,
estimated annual expenditure, income, profit and loss statement, repayment period,
etc. can be worked out and shown in the project report.
A format developed for formulation of dairy development schemes is given as
annexure I.
S.No Category of FarmerLevel of predevelopment
return to resources
Beneficiary’s
Contribution
33
(a) Small Farmers Up to Rs.11,,000 5%
(b) Medium Farmers Rs.11,001 – Rs. 19,250 10%
(c) Large Farmers Above Rs. 19,251 15%
INTEREST RATE
As per the RBI guidelines the present rate of interest to the ultimate beneficiary
financed by various agencies are as under:
No. Loan Amount CB’s and RRB’s SLDB/SCB
(a) Up to and
inclusive of Rs.
25000
12% As determined by
SCB/SLDB subject
to minimum 12%
(b) Over Rs. 25,000
and up to Rs. 2
Lakhs
13.5% -do-
(c) Over Rs. 2.0
Lakhs
As determined by
the banks
-do-
PRODUCTION PREFERENCE
GROWTH
The average birth wt.(Indian buffaloes) low 21 kg High 41 kg higher in male
calves than in females. Average daily gain of 548 gm between 3 – 6 months 404 gm
between births to 36 months. Body weight at first calving ranges from 367 kg
(Dharwati) 531kg (Nili Ravi) Higher growth rate in reveries breeds than swamp.
DIAL-A-MARKET…TO INDIA
Today, India is ‘The Oyster’ of the global dairy industry. It offers
opportunities galore to entrepreneurs worldwide, who wish to capitalize on one of the
world’s largest and fastest growing markets for milk and milk products. A bagful of
‘pearls’ awaits the international dairy processor in India. The Indian dairy industry is
34
rapidly growing, trying to keep pace with the galloping progress around the world. As
he expands his overseas operations to India many profitable options await him. He
may transfer technology, sign joint ventures or use India as a sourcing center for
regional exports. The liberalization of the Indian economy beckons to MNC’s and
foreign investors alike.
ADVANTAGES
Light in weight, easy to handle and no danger of breakage.
Distribution costs lower (occupies less space, lower pay-load due to light
weight, no collection of empties).
Bottle – washing costs eliminated (saving in equipment, detergents, steam,
etc.).
Tamper – proof,
Effective sales message can be printed.
Less Noisy (during filling, sealing and transportation).
No exposure to sunlight.
Filling machinery compact and occupied much less space.
No container deposit needed.
DISADVANTAGES
Costing higher per unit milk distributed.
Product not visible.
Difficult to remove cream.
Inspection of milk (for sediment) not possible.
Regular supply of special paper/film essential.
Not so easy to open
Some cases of leakage may occur.
DAIRY PLANTS
India’s modern milk supply goes back to December 15, 1950, when the Aarey
Milk Plant in Bombay launched the supply of pasteurized and bottled milk on large-
35
scale for the first time in India. Subsequently, over the years, the share of the
organized sector increased after the launching of Operation Flood in 1970.
PROMOTION THE SALES
These include (for both wholesale and retail sales) the following:
a) Home delivery.
b) Milk booths or distribution depots/bars.
c) Stores.
d) Soda fountains
e) Coin vending machines
f) Automatic dispensers
g) Factories, hospitals, jails, restaurants, schools, etc.
UTILIZATION OF RETURNED MILK
Unsold milk presents a problem of economic disposal. Under tropical
conditions, as in India, the returned milk should not be send again for sale as liquid
milk since exposure to high temperatures during its inward and outward journeys
subject it to quality deterioration and hence may cause consumer complaints. The
unsold milk can be given for separation or utilized for preparation of dahi, etc.
MILK PRODUCTION IN WORLD
India is the largest animal milk producing country in the world followed by
USA. It is estimated that the milk production would cross 50million tones by the end
of 1995 and target to 250 million tons by 2020AD.
1950 - 17 million tones
1996 - 70.8 million tones
1997 – 74.3mT
(Projected) 2020 -240mT
Expected to reach – 220 to 250mT – 2020
36
India contributes to world milk production rise from 12 -15% & it will increase up to
30-35% (year 2020)
What does the Indian dairy has to offer to foreign investor?
India is a land of opportunity for investor looking for new and expanding markets.
Dairy food processing holds immense potential for high returns. Growths prospective
in the dairy food sector are termed healthy, According to various studies on the
subject. The basic infrastructural elements for a successful enterprise are in
place
Key elements for marketing system
Raw material (milk) availability
An established infrastructure of technology
Supporting man power
DAIRY ORGANIZATION
Dairy is an important source of subsidiary income to small/marginal farmers
and agricultural labors. The manures from animals provide a good source of organic
matter for improving soil fertility and crop yields. The goober gas from the dung is
used as a fuel for domestic purposes as also for running engines for drawing water
from well. The surplus fodder and agricultural by products are gainfully utilized for
feeding the animals. Almost all draught power for farm operations and transportation
is supplied by bullocks. Since agriculture is mostly seasonal, there is a possibility of
finding the employment throughout the year for many persons through dairy farming.
A farmer can earn a gross surplus of about Rs.12, 000 per year from a unit consisting
of 2 milking buffaloes, the capital investment required for purchase two buffalo is Rs.
18,223. Even after paying a sum of Rs. 429 towards repayment of the loan and
interest the farmer can earn a net surplus of Rs. 6,000 to 9,000 approximately per
year.
PACKAGE OF COMMON MANAGEMENT PRACTICES RECOMMENDED
FOR DAIRY FARMER
37
Some of the major norms and recommended practices are as follows.
HOUSING
a. Construct shed on dry, properly raised ground.
b. Void water-logging, marshy and heavy rainfall areas.
c. The walls of the shade should be 1.5 to 2mts high.
d. The walls should be plastered to make them damp proof.
e. The cattle shade should be well ventilated.
f. The floor should be pucca/hard, even non-slippery impervious, well sloped
(3m per meter) and properly drained to remain dry and clean.
g. Provide 0.25 meter road, pucca drain at the rear of the standing space.
h. Provide 5-10sq, meter loaf space for each animal.
i. Provide proper shade and cool drinking water in summer.
j. In winter keep animals indoor during night and rain.
k. Provide individual bedding daily.
l. Maintain sanitary condition around shed.
m. Give adequate space for the animals.
FEEDING OF MILCH ANIMALS
a. Feed the animals with best feeds and fodders.
b. Cut the fodder at the right stage of their growth.
c. Chaff roughage before feeding
d. Moisten the concentrate mixture before feeding.
e. To estimate the daily feed requirement remembers that the animals consume
about 2.5 to 3.0 per cent of their body weight on dry matter basis.
MILKING IF ANIMALS
a. Milk the animals two to three times a day.
b. Wash the udder and teat with antiseptic lotions. Luke-warm water and dry
before milking.
c. Milk should be free from any contagious diseases and should wash his hands
PROTECTION AGAINST DISEASES
38
a) Be on the alert for signs of illness such as reduced feed intake, fever, abnormal
discharge or unusual behavior.
b) In case of outbreak of contagious disease, immediately segregate the sick, in-
contact and the healthy animals and take necessary disease control measures.
BREEDING CARE
a. Observe the animal closely and keep specific record of its coming in heat,
duration of heat, insemination, conception and calving.
b. Breed the animals in time.
CARE OF CALVES
a. Take care of new born calf.
b. Treat/disinfect the navel cord with tincture of iodine soon as it is cut with a
sharp knife.
c. Keep the calf separately from birth till two months of age in a dry clean and
well-ventilated place. Dehorn the calves around 4 to 5 days of age easy
management when they grow.
COMPANY PROFILE
39
WORK PROFILE
We have established a dairy unit named MODELMILK DAIRY (P) limited.The
promoters of the company are Sri D. Brahamanadam B.Nageswara
Rao,Dr.N.Venkata Rao & B.Brahma Naidu., at NIDUMANURU village,
Ramavarapadu Mandal, Vijayawada, Krishna District, Andhra Pradesh and
commissioned for commercial production for marketing during September 1999 it
handle 225000 liters of milk per day. The plant is located on Vijayawada –
Vishakhapatnam national Highway (NH.5), 5 kms from Vijayawada city towards
Vishakhapatnam, in an area of 13.00 acre. The unit is registered under S.S.I. The milk
in bulk is being purchased from other dairies processed, homogenized, packed and
marketed mainly in Major cities in Andhra Pradesh. The milk is being also sold in
Vijayawada, Guntur and Eluru town basing on consumers demand. By marketing the
milk in various towns, assured market outlet is provided to large number of village
milk producers for their surplus milk. The required machinery is installed in the dairy.
Strict quality standards are applied before marketing the milk for which well-
equipped laboratory is established. In order to deliver quality milk to the consumers
insulated trucks are used to transport milk from the dairy to various destinations.
MODEL MILKDAIRY PVT LTD is a dream come through to the dynamic
young and entrepreneurs who have jointly efforted to convert their skills, knowledge
and experience in the field of processing and producing milk and milk products.
Realizing the milk production potentialities of the inversion track of the
government of Andhra Pradesh and government of India, with self managed financial
resources and establish the Modern dairy in the year 1995 at Narasaraopet and erected
new plant at Nidammanuru the year 1995. Today, the dairy has passed to equate
major dairies in the southern region which has not only captured the market by also
has made Modern and accepted brand and preference of the consumers.
40
Model Milk Dairy (P) Ltd (MMDPL) Handle 6.5 lakhs litersof milk per a day in all
the packing stations and main dairy plant. Model Milk Dairy (P) Ltd having good
infrastructure and well equipped with all latest machinery to process 6.5 lakhs liters of
milk per a day which is the highest in the state of A.P. which has developed in a
decade.
MMDPL handles milk in the following locations:
PLACING LOCATION HANDLING CAPACITY PER DAY
GUDUR 4.0 LAKH LITERS
VELLALA CHERUVU 1.0 LAKH LITERS
BHIMADOLU 1.0 LAKH LITERS
PALAMANER 1.5 LAKH LITERS
VISION
To deliver best quality of milk and milk products at reasonable rates to maintain the
leadership in the milk market.
MISSION
To achieve market leadership in the area of milk products.
MAIN OBJECTIVES
To provide assured year and market for the surplus milk procured in the rural
areas supply wholesome milk and milk product to the urban consumer and to
stimulate milk production and to develop the required infrastructure.
PROCUREMENT OF MILK
MMDPL established 25 chilling centers in A.P and 8 chilling centers in
Narasaraopet to procure both cow and buffalo milk good quality milk is being
procured and chilling with in short time at chilling centers, to retain freshness of milk.
The strength of the MMDPL is to procure 6.0 lakhs liters of milk directly from agents
41
or farmers by having full equipped machinery and professionally trained staff.
MMDPL have full control on its systems, so that pure quality of milk and milk
products can be supplied to customers.
PRODUCTION
MMDPL has its main dairy plant at Nidumanuru with handling capacity of 4.0lakhs
liters of milk per day.
Market milk: - Main plant is processing 2.5 lakhs liters of milk per day in
automatic sachet filling machines to supply and distribution of milk to
Vijayawada, Eluru and Guntur etc... In insulated puffs.S
There is continuous growth in sale of milk from 50000 liters to 250000 liter
within a span of one-decade. MMDPL maintaining consistency in quality and
is standards consumers have much confidence.
MMDPL having its own supply chain management, which makes ease in
timely distribution and assured supply, which gains customers’ satisfaction.
At our calamander unit process and supply of 1.00 Lakh liters of milk and
20000 liters of Curd to Bangalore city.
At our vellalacheruvu and Bhimadolu
Packing stations processing and packing 2.0 Lakh liters of milk to Hyderabad,
Warangal Vijayawada Eluru Guntur and Rajahmundry.
PRODUCTS
The main plant has capacities with modern equipment to manufacture milk products
milk products like butter, ghee and milk powder.
Butter is made from pure cow and buffalo fat under hygienically processed
through continues butter making machine with a capacity of 8 tons per day.
Ghee is made from pure cow and buffalo butter under supervision of 30 years
experienced dairy technologists to retain granulation, color and aroma of ghee
with a capacity of 8 tons per day. Ghee is packed in a wide range of 7ML to
15 KGS.
42
Milk powder is made from fresh cow and buffalo milk, plant is capable of
making all type of milk powders with a capacity of 15 tones per day.
By-products like sterilized flavored milk, Lassie, Khova, Milk cake, Mysore
Palak Panner.
PRODUCT LINE
Milk T.M.DTM,FCM,STD(200ml,500ml,200ml).
UHT MILK 1lt,500ml,200ml (DTM,TM,STM).
GHEE 15kg.tin,200ml,500ml,1lt.
Tetra S.F.M Chocolate,badam,pine apple.
BUTTER MILK 200ml.
LASI 200ml.
CURD 100grms,200grms,500grms.
MISTHI DOI 100grms
PANEER 200gr,500gr,1kg.
DOODH PEDA 25gr,250gr.
BURFI 250grms,500grms.
BASUNDHI 50ml.
KALAKAND 1kg, 500grms.
MILK POWDER PLANT
The main dairy has powder plant of 15 tons capacity per day. The plant has been
designed to produce 15000 kgs of milk powder on a 20 hours per day. Evaporation is
done in multiple effect falling film evaporators and powder is manufactured with high
pressure nozzle spray dryer. The water evaporation capacity of the evaporator is 9400
kg per hour and spray dryer is designed to 758 kg per hour. Fluid bed dryer is also
provided.
The dairy is having the facility to convert surplus milk into milk powder
around 150000 per day on average. As we are getting good quality milk from all
chilling centers and best quality of milk powder is produced.
43
MARKETING
MMDPL is having good marketing facility of milk and milk products,
marketing offices at Vijayawada, Chennai, Bangalore and Hyderabad is having good
distribution system. All the marketing executives are professionally trained and
having good skills and experience in marketing products. To maintain cold chain
there are about 35 insulated puff vehicles to transport milk to various towns. There is
tremendous increase in sales of milk and milk products due to best quality, there are
about 3000 outlets in AP, TN and Karnataka. The dairy is catering need of 10 Lakh
customers daily in southern region.
QUALITY ASSURANCE
MMDPL has well maintained laboratories in all their dairies. Technically
qualified staff are looking after testing of milk and milk products. Quality
assurance programs are implemented at every stage to ensure quality of milk
and milk products.
This dairy is an ISO 9001:2000 and an ISO 2000:2005 certified company. The
dairy is following quality management system and food safety standards.
MMDPL is having ISI License and AGMARK License and all other statutory
standards as per requirements.
There is continuous growth is procurement and sales. The capacities of the
plants are also increased to handle the milk and to manufacture milk products.
To meet the demand in market there is also plan to introduce products like cup
curd, lassie in retail markets.
QUALITY POLICY
We are committed to achieve customer satisfaction throughhygienically
processed and packed Milk and Milk Products. Westrive to continually improve the
quality of our products andservices through up gradation of technologies and
systems.Model's soul has always been imbibed with an unwrittenperpetual
commitment to itself, to always produce and providequality products with continuous
efforts to improve the processand environment.
44
Adhering to its moral commitment and its continuous drive to achieve
excellence in quality of Milk, Milk products & Systems, Model has always been
laying emphasis on not only reviewing & re-defining quality standards, but also in
implementing them successfully. All activities of Processing, Quality control,
Purchase, Stores, Marketing and Training have been documented with detailed quality
plans in each of the departments. Today Model feels that the ISO certificate is not
only an epitome of achieved targets, but also a scale to identify & reckon, what is yet
to be achieved on a continuous basis. Though, it is a beginning, Model has initiated
the process of standardizing and adopting similar quality systems at most of its other
plants.
ACHIEVEMENT
Today 6.5 lakh framers are supply milk through 8072 dairy collection centers.
Covering about 12541 villages in the state. The milk procurement has grown to touch
360.8 million liter and sales of milk have touched 310.5 million liters during 2009-10.
Andhra Pradesh has made rapid strides in the past 3 decades and has emerged as a
major milk state. Dairying co-operative has become in instrument of change and
growth in villages.
HR FUNCTIONS
TECHNICAL INPUT ACTIVITIES
Animal health care
Artificial insemination
Feed and fodder activities
TRAINING CENTRE
This union has its own union training center funded by NDDB, to cater the
need of the society personnel and framers various activities.
FINANCE FUNCTIONS
FINANCE AND ACCOUNTS
The financial operation of model dairy in Vijayawada has been increasing
with a remarkable growth rate year by year from 1995-96 to 1999-2000 with all most
double from rupees 25 to 50 lakhs. The purchase price of the milk also been year and
45
this union is also in the habit of passing differential price since 1981 onwards up to
reporting years.
COMPETITORS
1. MODEL MILK
2. JERSEY
3. SANGAM
4. VAISHNAVAI
5. MOTHER
6. THIRUMALA
7. JYOTHI
8. VISHAKA
9. MASQATI
10. MUKUNDA
46
COMPANY PROFILE
MODEL MILK
NAME OF THE COMPANYMODEL MILK PRODUCTS
PVT.LTD.
Address of the Company
Nidamanuru, MODEL DAIRY MILK
Vijayawada - 521104, Andhra Pradesh,
India
Contact Phone:91-866-2842777/2842396
Fax:91-866-2842111
Year of Establishment1994
Type of UnitSmall Scale
Standard CertificationISO 9001:2000
No of Staff 300
47
ORGANIZATIONAL STRUCTURE
BOARD OF DIRECTORS
Mr. .P. DHANU PRAKASH MANAGING DIRECTOR
Mr. P. RATNAKAR ASST.GENERAL MANAGER
Mr.VENKATESH ASST. SALES MANAGER
Mr.RATNA KISHORE ASST.SALES MANAGER
SWOT ASSESSMENT OF MODEL DAIRY
STRENGTHS
48
MANAGING DIRECTOR
PRODUCTION DEPARMENT
SALES DEPARTMENT
PERSONAL DEPARTMENTFINANCE DEPARTMENT
ASST. GENERAL MANAGER
SUPERVISORSENIOR ACCOUNTS OFFICER PRODUCTION
MANAGER
DEPUTY GENERAL MANAGER
JUNIOR ACCOUNTS OFFICER
SENIOR ASST.
PLANT MANAGER
JUNIOR ASST.
MATERIAL MANAGERSALES MANAGERACCOUNTS OFFICER
QUALITY MANAGERCLERICAL STAFFTYPISTSTYPISTS
PROCESSING SUPERVISOR
CLERICAL STAFF
1. Strategically located in the Model
2. Quick availability of raw material
3. Popular brand known from years
4. Milk and milk products are available at competitive prices
5. ability to maintain uniform quality
6. timely delivery
7. new technology implemented for production of milk
8. Model has very good infrastructure
9. Model attends to the complaints of consumers immediately
10. Model pays the highest price for the milk collected from farmers in India and
loyalty among customers for the brand.
WEAKNESS
1. Freezing of marketable area.
2. Lack of flexibility in system.
3. Rivalry among sister unions
4. Government influence
5. Lack of personalize service to channel members
6. High overheads
7. Return are not expected
OPPORTUNITIES
1. Products at affordable prices
2. Your company has set high standards of quality and safety practices,which
gives it an inherent advantage
3. There is also a constant and conscious effort to add further value to the
consumer by offering new products and better quality of services in the
distribution chain.
4. The improvement in the standard of living of consumers and the higher
disposable income has increased the demand for high quality dairy products.
THREATS
49
1. Milk being a perishable commodity demands an efficient cold chain
management
2. Many new process are being developed to improve the quality of milk so
processed and to extend its shelf life
3. Your company is in the forefront of such initiatives in establishing this
infrastructure
4. The industry gas become highly competitive with diverse play.
THEORETICAL FRAME WORK
50
INTRODUCTION
Distribution decisions are critical in nature as they affect the affect the
visibility of the firm and the product. These decisions affect the market share of the
firm and hence great care has to be taken in selecting distribution alternatives
The size and diversity of the Indian market. The heterogeneity is not just on
account of culture and demographic profile of the population but also due to the
infrastructure existing in the country. For example, the following fact sheet on the
Indian market.
Number of towns and cities: 3700
Number of metros: 4
Number of villages: 6, 30,000km
Total length of road: 3,319,644km
Total length of concrete road: 1,517,077km
Rail network: 62,915km
Total no of telecom connections: 18, 95 million
Ratio of the number of retail outlets to the population 5.5outlets 1000persons.
Number of accessible villages: 5, 00,000
This diversity in terms of accessibility of markets today posses a majority
marketing challenge. Increasingly, marketers realize that if they were to make their
brands available in the right size, at the right time, and at the right price, the Indian
consumer can be motivated to buy and consume them
Marketing management
“Marketing management is the process of planning and executing the
conception. Pricing, promotion and distribution of ideas, good and services to create
exchanges that satisfy individual and Organizational objectives.”
Industrial Marketing
“Industrial buyers constitute the largest market of all the purpose volumes of
transactions involved in industrial buying significantly exceeds that of the ultimate
consumer market.”
ROLE OF MIDDLEMEN OR INTERMEDIARIES
51
Besides making the product available to the customer, middlemen perform
several other roles and functions
Information
Middlemen have a role in providing information about the market to the
manufacture .Developments like changes in customer demography, psychographic,
media habits, entry of a new competitor and changes in customer preferences. Since
middlemen are present in the market place and close to the customer, they can provide
this information at no addition cost.
Price Stability
Maintaining price stability in the market is another function a middlemen
performs. The middleman absorbs an increase in the price of the product and
continues to charge the customer the same old price. The middleman also maintains
price stability by keeping his overheads low.
Promotion
Promoting the products in their territory is another function that middlemen
perform. Many of them design their own sales incentives programmer amied at
building customer traffic at their outlets.
Financing
Middlemen finance manufactures operations by providing the necessary
working capital in the form of Advance payments of goods and services. Because it
has to be made even the products are bought, consumed and paid for by the ultimate
consumer.
Titles
Most middlemen take the title of goods, services, and trade in their own name.
This helps in diffusing the risks between the manufacturer and middlemen. This also
enables middlemen to be in physical possessions of the goods, which in return enables
them to meet customer demand at the very moment it arises.
Marketing Flows in Marketing Channels for a Typical Consumer Company
52
Physical flow:
Title flow:
Payment flow:
Information flow:
Promotion flow:
THE NEW ROLE OF INTERMEDIARIES
53
Suppliers of Inputs
Transporter and Warehouses
Manufacturer Transporters and C&F agents or company warehouses
Whole salerTransportersRetailersCustomers
Input Suppliers
Manufacturer Wholesalers or Dealers
Retailers Customers
Suppliers Bank Manufacturer Wholesaler/Dealer
Retailers Customers
Suppliers of Inputs
Transporter and Warehouses and Banks
Manufacturers
Transporter and Warehouses and Banks
Wholesaler/Dealer
Transporter and Warehouses and Banks
Customers Retailers
Suppliers of Inputs
Advertising and agency
Manufacturers
Advertising and agency
Trade Customers
The role of intermediaries is fast undergoing a change. Impact by Internet
and mobile communication technologies, intermediaries find that their conventional
role of selling the goods in their possession and competing on the basis of price does
not hold good anymore .Today , since the customer can access any intermediary
anywhere in the world. Hence the middlemen have to have access to the basis full
range of products and service required by the customer.
CHANGING ROLE OF MIDDLEMEN
Conventional Role Contemporary Role
Transact discrete product or service
Link benefits to produce a superior
customer experience in new “market
space”
Sell what they have, or what is in stock
Access and get to customer the full range
of products and service they need for this
experience
Cut costs to compete on price of products
and services
Get rid of non-value addition activies,
waste, duplication.
Focus on discrete core items Concentrate on value-added services
Gear offerings to average customerPersonalize offering to suit unique
individual needs
TYPES AND NATURE OF MIDDLEMEN
There are three types of middlemen that facilitate the flow of goods and
service from manufacturer to the customer
Merchant Middlemen
These are the intermediaries who take title to the goods and service and sell
them. We know them as dealers, wholesalers, and retailers. These middlemen get
margins and bonuses as compensation. They share the risk with manufacturers when
they take title and physical possession of the goods.
Agents: they help in identifying potential customers and even in negotiations. They
do not share risk with manufacturers as they do not take the title of goods and
54
services. Agents earn a commission and reimburse for all expenses by the
manufacturer.
Facilitators: these are independent business units that facilitate the flow of goods
and services from the producer to the customer without taking a title to them or
negotiation for them on behalf of the producer.
CHANNEL LEVELS
One of the important decisions that firms have to often is
regarding the number of channel levels required to serve a given market. Channel
level represents channel members who have a specific role to play. From as low as
zero ,or in other words, directly from the manufacture to the customer, one can have a
high as 4 to 5 levels involved in distribution . Typically, zero level existing in most
industrial product marketing, particularly in capital equipment.
When the number of customers is high and they are concentrated in
specific geographical areas without any uniform pattern in their order lot size, that is
some buy in small volumes and other in bulk, the firm adopts one channel level of
distribution. Here the firm sells its goods to a whole seller or larger dealer or transfers
them to an agent.
Many a time, as in the case of consumer products, customers are spread all over
the country and the market is large. To reach out to such a vast market, a firm has to
necessary increase the length of the channel and one finds two, three, four levels of
distribution. The Indian market has undergone a significant change with the
emergence of middle-class consumers all over the country. Even in rural markets
there has been an increase in income levels and the demand for branded and package
goods is on the increase, awareness also increase. Traditionally, most firms
transported their goods from the factory to state capital, which had earlier been the
major markets.
Wholesalers would buy their requirements from this point and then redistribute the
goods to different towns. Normally the wholesaler would have his sales force or direct
contact with the some major retailers and would sell through them This often left gaps
in the market as, many a time, the wholesaler would sell to the retailers, not necessary
because of market demand but because the retailer was financially sound and could
pay the whole seller immediately. This obviously implies increase in width of the
channel same level to serve the market.
55
CONSUMER MARKETING CHANNEL
0-Level 1-Level 2-Level 3-Level
A zero level channel contains one selling intermediary, such as a
retailer. A two level channel contains two intermediaries. In consumer
markets, these are typically a wholesaler and a retailer. A three level channel
contains three intermediaries. Om the meat packing industry, as many as six
levels. From the producer point of view, obtaining information about end users
and exercising control become more difficult as the number of channel levels
increases.
INDUSTRIAL MARKETING CHANNELS
56
Manufacturer Manufacturer
ConsumerConsumerConsumer
RetailerRetailerRetailer
Jobber
WholesalerWholesaler
ManufacturerManufacturer
Consumer
0-Level 1-Level 2-Level 3-Level
Channels commonly used in industrial marketing. An industrial goods manufacturer
can use its sales force to sell directly to industrial customers, or it can sell to industrial
distributors, who sell to the industrial customer, or it can sell through manufacturer’s
representatives or its own sales branches directly to industrial customers, or indirectly
to industrial customers through industrial distributors. Zero, one, and two level
marketing channels are quite common.
FACTORS DETERMINING THE LENGTH OF THE CHANNEL
From the above discussion, it may be concluded that following will determine the
length of the channels of distribution.
(a) Size of the Market: The larger the market size , the economical it is to indirectly
serve the market and hence the longer the channel. Conversely the smaller the
market, smaller the channel.
(b) Order Lot Size: If the average order lot size is small, it is better to have a longer
channel than when the average order is in bulk or if a container load is bought.
(c) Service Requirements : If the product and market requires a high level of service
and it is a major factor in buying decision, it is advisable that the keeps a shorter
channel like zero or one level only
57
Manufacturer Manufacturer Manufacturer Manufacturer
Manufacturer’s representative
Manufacturer’s sales branch
Industrial distributors
Industrial customer
Industrial customer
Industrial customer
Industrial customer
(d) Product Variety: If customers shop for an assortment of the products it is
advisable that the firm ensures the availability of its product range at all outlets
selling complementary and substitute products.
FACTORS INFLUENCING DISTRIBUTION DECISIONS
Distribution patterns, channel objectives, and constraints are influenced by a host of
variables .these are.
Market Characteristics
Market characteristics play an influence role on distribution decisions. For
example, if customer wants a high level of service, manufacturers will have to ensure
that its channel members are able to provide it .the latter alternative may be costly but
it may ensure a high level of customer confidence.
Company Characteristics
The next variable is company characteristics and objectives. The channel
design is influenced by the company’s long-term objectives, financial resources,
manufacturing capacity, marketing mix, and even its corporate philosophy.
Product Characteristics
Here the key issues for analysis are product value, perceived risk, nature of the
product. Product value and product risk is high.
Middleman Characteristics
This refers to middlemen’s aptitude for service, promotion, handling ,
storage, contract, and credit. Channel design reflects the strength and weakness of
different intermediaries.
Intensity of Competition:
The nature and intensity of competition in the industry will determine the
distribution pattern by a firm. Some industries have multiple brand outlets.
Environmental characteristics like government policy, statutory provisions ,state of
the economy, technology, infrastructure development also affects.
IDENTIFYING MAJOR DISTRIBUTON ALTERNATIVES
We have mentioned the three distribution alternatives in the preceding
sections, namely intensive, selective, and exclusive.
58
Intensive: This alternative involves all the possible outlets that can be used to
distribute the product. Which is mainly use for soft drink firms? They have multiple
outlets to ensure this easy possible availability to the customer.
Selective Distribution: This alternative helps focus the selling efforts of
manufacturing firms on a few outlets rather than dissipating it over countless marginal
ones. Selective distribution can help the manufacturer gain optimum market coverage
and more control.
Exclusive Distribution: When the firm distributes its brand through just one or two
more outlets in the market who exclusively deal in it and not all competing brands.this
is a common form of distribution in product and brands that seek a high prestigious
image. The firm also hopes to get the benefit of aggressive selling by such outlets.
TERMS AND RESPONSIBILITY OF INTERMEDIARIES
The commercial policy of a manufacturer often lays down the terms and conditions
and responsibility for the intermediaries.
(a) Price Policy: These sets out the price at the middlemen will get the product from
the manufacturers and the discount schedule. It also mention the price at which
middlemen may sell the product.
(b) Payment Terms: The manufacturing firms stipulates the modes and terms of
payment. Others may accept a letter of credit as a mode of payment.
(c) Returns Policy: this indicates the warranty that the manufacturer extends to the
intermediary. Some firms offer spot replacement for any of its products returned
by the customer. Other take time to settle these claims.
(d) Mutual Service and Responsibilities: These should be spelt out clearly,
particularly in the case of franchised and exclusive agency channels.
(e) Territorial Rights: The manufacturer should spell out the territorial jurisdiction
of each of the distributors to avoid any territory jumping. This will also helps in
the distributor’s evaluation.
CRITERIA FOR EVALUATING CHANNEL ALTERNATIVES
59
The channel alternatives have to be evaluated from the point of view of the
cost of distribution, the degree of control of manufacturer gets over the market
through an alternative.
Evolution of Channels
The distribution strategy of any manufacturing firm should
respond to market change. As markets evolve, products nature, and competition
intensifies, the distribution plan of the has to be modified. One cannot assume that a
distribution plan, once evolved, will continue to delivery results for the entire period
of the products life. This is because of changing behavior and characteristics of
customer who adopt the product at different time intervals. While in the introduction
and early growth phase customers are willing to pay any price and go the place to buy
it, at the latter stage of growth and early maturity, customers demand convenience
buy it. But as products enter the latter part of maturity, customers became price and
convenience sensitive. Hence the planning the distribution strategy a firm should
consider value addition by the channel and market growth rate.
High
Market
Growth
Rate
Low
High Low
Value added by channel members
VERTICAL MARKETING SYSTEM
60
Growth
Dedicated Stores:
Computer Stores
Shopper’s Stop
Mature
Department Stores
like Akbarallys
Introductory
Specialist Channels like
boutiques in fashion/
designer wear
Decline
Discount Stores
Low cost alternatives
like “Discount Sales”
Often one finds that the manufacturers, wholesalers, retailers are locked in an
unproductive conflict. These is because each of them conventionally acts as
independent business units pursuing a profit goal even though, at a time , it may work
against the others. the vertical marketing systems achieves economies of scale through
their size, bargaining power, and eliminating of duplicates services.
TYPES OF VERTICAL MARKETING SYSTEMS
(i)Corporate Vertical Marketing Systems: In this successive stages from
production to distribution are under single ownership of any of the channel members.
Vertical integration is achieved through forward or backward integration.
(ii)Administered VMS: Unlike the corporate VMS administered VMS seeks to
control successive stage from production to distribution not through ownership but
through the size and power of one of the channel member like brand leaders.
(iii)Contractual VMS: This consists of independent firms at different levels of
production and distribution integrating their programs on a contractual basis to
obtained larger economies of scale and sales impact than they could achieve alone.
Some are voluntary chains.
HORIZONTAL MARKETING SYSTEMS
Another contemporary marketing system that challenges the conventional one is this.
It reflects the readiness of two or more non-related companies to put together
resources to exploit an emerging market opportunity.
Multichannel Marketing System
Lately, firms have been realizing that one single system or channel system is not
always able to deliver the desired results. For one, Indian market has grown
dramatically over the last one decade with the emergency of the middle class, working
couples, and single child families. This growth is not just restricted to metros but has
spread across the country to every towns and rural areas. In this multiple channels are
using.
MANAGING THE CHANNEL
61
Just as no single distribution plan can remain static in the midst of market changes,
channel members expectation also change. At one stage , channel members used to
take pride in mentioned their relationship with well-know nations and multination’s
firms like Godrej, Hindustan Liver and so on. Manufacturing companies today
demand much greater selling efforts from their middlemen. The former also want to
be provide timely market information, more warehouse space, competitive advantage.
Pressure on margins is an inevitable element in an intra channel competition.
CHANNEL CONFLICT
To manage channel conflicts the marketer must understand
(a)The type.
(b)The nature or cause
(c)Magnitude of the conflict.
TYPES OF CONFLICT
In any channel arrangement there can three types of conflict.
(i)The Vertical-level Conflict: Vertical level conflict occurs when the channel
members at one levels is in conflict with another member at the next higher or lower
level.
(ii)Horizontal-level Conflict: Conflict at the same level between channels members
is called horizontal-level conflict .Hence, inter stockiest conflict or conflict at the
retail level among retailers on issue like pricing and territory jumping.
(iii)Multichannel-level Conflict: Sometimes the middlemen come in conflict with
the manufacturer, using both direct and indirect means of distribution. Such a conflict
is called multichannel-level conflict.
NATURE OR CAUSE OF CONFLICT
Channel conflict occurs largely due to financial and non-financial reasons.
(i)Goal Incompatibility: A Major factor causing conflict between manufacturers and
wholesalers is the perceived goal incompatibility between them.
(ii)Role Ambiguity: Many a time conflicts occur because of role ambiguity. This is a
common cause of conflict in multichannel conflict.
(iii)Difference in Perception of the Market: In this and economy may also create a
conflict between the manufacturer and middlemen.
MAGNITUDE OF THE CONFLICT
62
This refers to the seriousness of conflicts. At times the conflict may not be of a
magnitude the magnitude demanding the manufacturer’s attention.
MANAGING THE CONFLICT
To minimize the conflict, the manufacturer may take the following steps:
(a)Communication: An effective way to minimize channel conflicts is to have
regular communication between manufacturers and the channel members.
(b)Dealer Council: this resolves conflict is through formation of dealer councils.
Such resolves horizontal-level and vertical conflicts.
(c)Super ordinate Goals: this gives of maximum customer satisfaction. If the
channel members can be motivated to perceive customer satisfaction as the ultimate
goal of all members in the channel and leads to gain profits.
(d)Arbitration and Mediation: this gives resolved through arbitration and
mediation. Generally in intramiddlemen conflicts horizontally or vertically.
MOTIVATIG CHANNEL MEMBERS
Another major challenge to marketer today is to keep channel member motivated so
that they give their best performance. Financial rewards like including higher
margins, extended credit time, bonuses, and reimbursement of expenses. While non-
financial rewards include contests, public recognition, paid holidays and training.
Through these activates we can motivate the channel members.
PLINNING A MARKET DRIVEN DISTRIBUTION SYSTEM
In any market situation, if the distribution system of a firm is not customer focused or
market driven, it risks losing its market share. Louis Western and Frederic
D.Sturidvant suggested in eight step process.
1. Knowwhat Customers Want: in this service can categorized in five groups.
(a) Lot size
(b) Market decentralization.
(c)Waiting time.
(d)Product variety.
(e)Service backup.
2. Decide on the Outlet: the marketer can develop clusters or segment that value
different service in particular way and whose prioritization of service is similar.
3. Determine the costs: Once the alternative has been selected, the market should
now detriment the costs will be. This help of either in house corporate executives or
outside the professions. They also determine link suppliers.
63
4. Bind the Ideal: ideal alternative should tested agnist
(a) Efficiency in costs, revenue, profits.
(b) Effectiveness, especially in market share.
(c) Adaptability or ability of capital invested to accept new products.
5. Compare the Alternatives: one must compare these alternatives with the existing
one on parameters like function performed by various channel participants. Costs and
discounts.
6. Review Assumption in the Light of Research
7. Comfort the Gap between the “Ideal” and the Actual Distribution System
8. Implementing Change in the System, if Required.
CHANNELS OF DISTRIBUTION WITH REFERENCE TO MODEL DAIRY
CHANNELS OF DISTRIBUTION
MILK
Door delivery
Manufacturer Retailer/agent Customer
A set of the interdependent organizations involved in the process of market a product
or services available for use of consumption by the consumer or business user.
According to bucking, a distribution channel consists or the set of the people and
firms involved in the transfer of the title to a product moved from producer to ultimate
consumer or business user.
FUNCTIONS OF DISTRIBUTION CHANNEL:
64
Manufacturer
Door delivery
CustomerRetailer/agent
A distribution channel moves goods from producer to consumer. It overcomes the
major time, place and procession gaps that separate goods and services from those
who use them.
Members of marketing channel perform many key functions such as gathering
information, developing promotion, increasing contact, matching the buyer’s needs
negotiation, physical distribution, financing and risk taking of the channel work.
MILK PRODUCTS:
NUMBER OF CHANNEL LEVELS
The number of channel levels can channelize marketing channel. Each layer of
marketing intermediaries performs some work in bringing the product and ownership
closure to the final buyer is a channel level. Each middleman that perform some work
they are part of every channel.
Direct market channel: A marketing channel alternatives and decided on the
best channel design, it must implement and manage the chosen channel. The channel
manager calls for selecting and motivating individual channel member and evaluating
their performance overtime. The various alternative which a company has in
distribution channel, can be understood from the below tables.
CUSTOIMER MARKETING CHANNEL:
65
Manufact RetailerStockiest Consumer
SOME OF THE IMPORTANCE OF THE CHANNELS OF DISTRIBUTION:
1. Channel provide distribution efficiency to manufacture.
2. Channel supply products in required assortments.
3. Channel provider salesmanship.
4. Channel help merchandise the product.
5. Channel help implement the prise merchandise.
6. Channel look after physical distribution and financing function.
7. Channel of distribution of intermediaries, channel design, location, of
outlets, channel remuneration and dealers principal relation
8. Physical distribution transportation warehousing, inventor level, order
Processing, etc.
CHANNEL 1
In this channel the milk distribution to the consumer through the commission
agents. These commission agents are playing vital role in the sales of Model dairy.
This channel is the most important channel maximum of sales is being achieved
through this channel. This is the easiest channel through which consumer can acquire
66
Plant
Commission
Consumer
Delivery Boys
the milk. This commission agent in turn appoints delivery boys for supply to
consumer. This is the easiest channel where goods will be delivered directly to the
consumer through dairy vans in time. I.e. both morning and evening. This facility
makes commission agents comfortable and motivated. Even cash is collected at the
points of booths.
CHANNEL 2
This channel includes retailer where the other products like butter milk, Doodah
peda,
Lassi, Flavored milk, Ghee, etc..... which are being manufactured by the Model
dairy are being sold.
A retailer is a person who sells ultimate customers. In case of Model
dairy at some of the areas from where every customer can buy dairy pros. The
organization itself established retail shop and employed its own people. It has
also given this retailer shop even to the outsiders. In these retail outlets
customers can get milk products other than milk like ghee, flavored milk, doodh
peda, etc.,
CHANNEL 3
67
Model Dairy
Retailer
Customer
In fact this cannot be considered as a channel because there are no intermediaries
between the organizations. Hence the customers are in direct contact with the dairy.
They give order for the special occasion to dairy; these orders will be met on time by
Model dairy personnel. The customer can book directly to the organization or they
can even book through booth agents. The hotels, restaurant and other sweet merchants
use even this channel. There will be direct contact between the customer and Model
dairy. The transaction purchasing will be only through marketing department. This
channel can also be considered as the zero level channels where the manufacturer is
directly selling to the consumer. This is also kind of direct marketingchannel to the
products like milk etc.,
This type of channel is very useful where the consumer can directly be in contact with
the producer.
CHANNEL 4
68
Model Dairy
Stockiest
Retailer Consumer
Model Dairy
Customer
Model dairy has recently gone for this channel of distribution. This channel
consists of stockiest who are equivalent to the dealer. Designing of the channel is not
a day to day task in the channel management. It is the administration of the dealer
network that constitutes an everyday task in channel management. These stockiest
were invited by the organization through the news paper ads.
LOCAL MILK MARKETING
Vijayawada city having of about 8 lakh including the nearby sub urban. To
cater the needs of the consumer in Vijayawada city and also in the important towns of
Kondapalli, Gannavaram, Ibrahimpatnam, Mangalagiri, Guntur and Machilipatnam
milk is being supplied in sachets as indicated here under.
1 Is your opinion about the present distribution channel of model dairy?
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TABLE: 1
Present Distribution Channel No. Of Agents % of Agents
Excellent 18 11.5
Good 118 76
Satisfactory 19 12.5
FIGURE:1
Excellent Good Satisfactory0
20
40
60
80
100
120
140
18
118
1911.5
76
12.5
No. Of Agents% of Agents
Interpretation
From the above 76% of retailers are saying that the distribution channel of
model dairy is good. 12.5% of retailers are saying that the distribution channel of
model dairy is satisfactory and 11.5% of retailers are saying that the distribution
channel of model dairy is excellent.
Majority of retailers are saying that the distribution channel of model dairy is
good. Because model dairy provide different channels of distribution, so many
retailers show interest towards model dairy produce
2 Monthly incomes of a dealer and distributor through model dairy products?
70
TABLE: 2
Monthly Income No.Of Agents % of Agents
Up to 5000 103 66.5
6000 24 15.5
8000 19 12.5
10000 9 5.5
FIGURE:2
1 2 3 40
2000
4000
6000
8000
10000
12000
0
6000
8000
10000
66.5 15.5 12.5 5.5
Monthly IncomeNo.Of Agents% of Agents
Interpretation
From the above table, it is being observed that the majority of respondents 66.5%
under monthly income up to Rs.5000, 15.5% respondent’s income between the
monthly income of Rs.6000. 12.5% respondents income between the monthly income
of Rs.8000 and then only 5.5% respondents monthly income above Rs.10000.
3. How is the quality of model dairy milk products?
71
TABLE: 3
Quality No.of Agents % of Agents
Good 107 69
Satisfactory 44 28.5
Poor 4 2.5
FIGURE:3
Good Satisfactory Poor0
20
40
60
80
100
120107
44
4
69
28.5
2.5
No.of Agents% of Agents
Interpretation
From the above table, 69% of retailers saying that model dairy milk and milk
products are in good quality, and 28.5% of retailers says that model dairy milk is
satisfactory, and 2.5% of retailers say it is poor in quality of milk and milk products.
Majority of retailers saying that model dairy milk and milk products quality is good,
so model dairy produce good quality of milk and milk products.
72
4. Are you satisfied with the commission offered by model dairy to sell their
products?
TABLE:4
Commission No. Of Agents % of Agents
Yes 98 63.5
No 57 36.5
FIGURE:4
No. Of Agents % of Agents0
20
40
60
80
100
120
98
63.557
36.5
YesNo
Interpretation
From the above table, it is observed that 63.5% of the retailers are satisfied
with commission offered by model dairy. And also 36.5% agents do not satisfied with
the commission offered by model dairy. The majority of retailers (63.5%) are satisfied
with commission.
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5.Why people prefer model dairy milk ?
TABLE:5
People Prefer No.Of Agents % of Agents
24hrs availability 5 3
Competitive Price 38 24.5
Prompt and easy delivery 122 72.5
Attractive Packing 0 0
FIGURE:5
24hrs availability
Competitive Price
Prompt and easy delivery
Attractive Packing
0
20
40
60
80
100
120
140
5
38
122
03
24.5
72.5
0
No.Of Agents% of Agents
Interpretation
From the above table , it is evident that 72% of customer prefer dairy milk
because pompt and easy delivery , 24.5% of customer prefer model dairy milk
because of the competitive price, 3% of customers prefer 24hours availability .
74
6.How do you place an order for the stock?
TABLE:6
Order for Stock No.Of Customers % of Customers
Over Through Phone 52 33.5
Send a Phone 0 0
Through Sales Vechicles 0 0
Representative Of Model Collects the indent 103 66.5
FIGURE:6
Over T
hrough
Phone
Send a
Phone
Thro
ugh Sa
les Vech
icles
Repres
entati
ve O
f Model
Collects
the i
ndent
020406080
100120
52
0 0
103
33.5
0 0
66.5
No.Of Customers% of Customers
Interpretation
From the above table, 66.5% of retailers said that representative of model
dairy collects the indent, and 33.5% over through phone , most of the people directly
representative of model dairy collects the indent.
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7.How fast do you get the stock?
TABLE:7
Get the Stock No.Of Customers % of Customers
Same Day 151 97.5
Immediately receipt of the day 4 2.5
After 1 day 0 0
After 2 days 0 0
FIGURE:7
1 2 3 40
20
40
60
80
100
120
140
160151
4 0 0
97.5
2.5 0 0
Get the StockNo.Of Customers% of Customers
Interpretation
From the above table evident that 97.5% of retailers said that they get stock on
same day, while 2.5% of retailers said that immediate receipt of the day .with the help
of my observation I found that the retailers are more interested to sell Model dairy
products because of the fast delivery offered by the model dairy.
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8. Which product has a minimum sale?
TABLE:8
Maximum Sale No.of Customers % of Customers
Milk 103 66.5
Butter Milk 2 1
Curd 33 21
Lassi 1 0.5
Other products 16 11
FIGURE:8
Milk Butter Milk Curd Lassi Other products
0
20
40
60
80
100
120
103
2
33
1
16
66.5
1
21
0.5
11
No.of Customers% of Customers
Interpretation
From the sales analysis of model dairy products shows that 66.5% of
customers buying UHT MILK, 21% buy curd and 11% buy other products ,
buttermilk 1% and finally lassie 0.5%. with the help of sales data we can evaluate the
model dairy milk customers are than the other milk related products. In those milk
related by products also curd is in the next position of sales.
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9.please specify the price of the milk that consumers can attract?
TABLE:9
Price per Litre No.of Customers % of Customers
Rs. 28 3 2
Rs. 26 2 1
Rs. 30 30 19
Rs. 38 120 78
FIGURE:9
Rs. 28 Rs. 26 Rs. 30 Rs. 380
20
40
60
80
100
120
140
3 2
30
120
2 1
19
78
No.of Customers% of Customers
Interpretation
I was found that 78% of the people were buying the milk per liter for the cost
of Rs.38, 19% of people were buying the milk for the cost per liter for Rs.30. and
other of the people were buying the milk cost per liter for Rs 28 and only 1% of the
people were buying the milk per litre for Rs26 . so majority of the people were buying
the milk for Rs38. (with my observed the people are purchasing full cream milk &
next prefer for the people is economy price milk.)
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10.Are you selling other milk and milk products?
TABLE:10
Selling Other Milk Products No.Of Agents % of Agents
Yes 38 24.5
No 117 75.5
FIGURE:10
No.Of Agents % of Agents0
20
40
60
80
100
120
140
38
24.5
117
75.5YesNo
Interpretation
From the above table I observed that the maximum % i.e.., 75.5% of the
agents are not selling other milk and milk products and 24.5% of the agents are selling
other milk and also the Model dairy milk& milk products .Even though the
competition is high in the market then also the agents are prefer to sell Model dairy
milk and milk products.
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11.Have you face any problem with products if model dairy?
TABLE:11
Face any problem No.of Agents % of Agents
Yes 17 11
No 138 89
FIGURE:11
No.of Agents % of Agents0
20
40
60
80
100
120
140
160
1711
138
89YesNo
Interpretation
I was observed that 11% of the agents facing the problem , and 89% of the
agents did not face any problem(with Model diary products) . Because the model
dairy provide all specialties for the dealer and distributors.
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12. What is your opinion about the price of model milk and milk products ?
TABLE:12
Price No.Of Agents % of Agents
High 20 13
Reasonable 133 86
Low 2 1
FIGURE:12
High Reasonable Low0
20
40
60
80
100
120
140
20
133
213
86
1
No.Of Agents% of Agents
Interpretation
I was observed that 86% of the people were saying reasonable price. 13% of
the people were saying that milk and milk products are very high. 1% of the people
were saying that milk and milk products are low.
81
13. How long have you been using these model milk and milk products ?
TABLE:13
Years No.Of Agents % of Agents
10 44 28.5
5 54 35
3 19 12.5
2 39 24
FIGURE:13
1 2 3 40
10
20
30
40
50
60
10
53 2
44
54
19
39
28.5
35
12.5
24
YearsNo.Of Agents% of Agents
Interpretation
With the help of my study I found that 35% of the people were using model
dairy products since five years, 28% of the people were saying that using ten years,
24% are using two years, and 12.5% are using from three years. The people are very
loyal to the Model dairy products.
14. Which factor do you consider to selling model milk and milk products?
82
TABLE:14
Factors No.Of Agents % of Agents
Quality 90 58
Service 18 11.5
Commission 45 29
No Leakage and Spoilage 2 1.5
FIGURE:14
Quality Service Commission No Leakage and Spoilage
0
10
20
30
40
50
60
70
80
90
10090
18
45
2
58
11.5
29
1.5
No.Of Agents% of Agents
Interpretation
I was observed that 58% of the people were saying based on the quality, 29%
of the people were saying that commission, 11% are saying based on service, and
1.5% are saying that there is no leakage and spoilage. so the people are very happy
about the quality parameters maintained by the Model dairy.
83
15. Are you satisfied with the service offered by the model dairy?
TABLE:15
Service Offered No.Of Agents % of Agents
Yes 133 86
No 22 14
FIGURE:15
No.Of Agents % of Agents0
20
40
60
80
100
120
140 133
86
2214
YesNo
Interpretation
I was observed that 86% of the people were saying that they are satisfied and
remaining 14% of the people were saying that they are not satisfied. In that also the
people who are satisfied because of the quality maintenance, delivery system(proper
distribution channel),services and all are available at reasonable price.
FINDINGS
84
Majority of Retailers are saying that the distribution channel of Model Dairy is
good
Observed that the majority of respondents 66% under monthly income up to
5000.
The 69% of distributers saying that Model Dairy milk & milk products is
good quality.
The majority of retailers are satisfied with commission.
Agents are evident that 72% of customers prefer Dairy Milk because prompt
& easy delivery.
Evident that 97% of retailers said that they get stock on same day.
I was observed that 35% of the agents using these Model Milk & Milk
products from past 5years.
Factors that consider to selling Model Milk & Milk products by agents as
based on quality.
SUGGESTIONS
85
Maintain good relationship with loyal customers for business extension
of Model Dairy.
Concentrate on By-Products to get the effective market share in giving
the competition with other Dairy Milk companies.
Provide sophisticated commission to agents.
Solve the complaints of dealers with in the short span of time.
Use the effective Advertisement about the Model Milk & Milk
products.
CONCLUSION
86
Model Dairy has a competitive advantage when it comes to its distribution
and logistics procedure because the company has been able to mobilize every resource
it has to efficiently distribution its products. Model Dairy clearly understand its
competitive advantage in being so big whose operations is of large scale and has used
it to gain favorable edge in the competitive .
Model Dairy have embarked on a multi varied marketing campaign that
extends and distribution channel. The successful ongoing marketing it in corporate
media advertisement, community partnership , innovative packing design and
interactive digital engagement through the internet and new media channels.
From the entire project work the Model Dairy company good brand image in
the Vijayawada city. The Model Dairy distribution channel minting good channels
starters avoiding shortly of products all forms of retailers and these company
operating own outlets to grab more market share.
BIBILOGRAPHY
87
S.NO
TITLE OF THE BOOK
AUTHOR PUBLISHER EDITION
1 Marketing management
P.Kotler & K.Keller
Himalaya publications
12th Edition.
2 Marketing channels
Louis w.stern
Prentice hall of India
5th Edition
3 Marketing Management
Rajan Saxena
Mc.Graw-Hill 3rd Edition
NEWS PAPERS
The Hindu
Business Line
MAGAZINES
Business Line
Business World
Frontline
WEBSITES
www.nabard.org
www.nddb.org
www.modeldairyfarm.com
www.ffymag.com
pQUESTIONARY TO THE BOOTH AGENTS
88
NAME :
PLACE :
BOOTH NUMBER :
QUESTIOS
1) Is your opinion about the present distribution channel of Model Dairy ( )
a. Excellent.
b. Good.c.Satisfctory.
2) Monthly Income of a dealer and distributer through Model Dairy products ( )
a. Rs.5000/-
b. Rs.6000/-
c. Rs.8000/-
d.Rs.10000/
3) How is the quality of Model Dairy products ( )
a. Good.
b. Satisfactory.
c. Poor.
4) Are you satisfied with the commission offered by Model Dairy to sell their products ( ).
a. Yes.
b. No.
5) Why people prefer Model Dairy milk. ( ).
a. 24 hrs Availability.
b. Competitive price.
c. Prompt easy delivery.
d. Attractive packing.
6) How do you place an order for the stock ( ).
89
a. Over through phone.
b. Send a person.
c. Through sales vehicle.
d. Representative of Model collects the indent.
7) How fast do you get the stock? ( ).
a. Same day.
b.Immeditaly receipt of the day.
c. After one day.
d. After two days.
8) Which product has a maximum sale ( ).
a. Milk.
b. Butter milk.
c. Curd.
d. Lassie.
e. Other products.
9) Please the specify the price of the milk that consumer an attract ( ).
a. Rs.28/-
b. Rs.26/-
c. Rs.30/-
d.Rs.38/-
10) Are you selling others milk and milk products ( ).
a. Yes.
b. No.
11) Have you faced any problems with products of Model Dairy( )
a. Yes.
b. No.
12) What is your opinion about the price of Model milk and milk products? ( ).
90
a. High.
b. Reasonable.
c. Low.
13) How long has you been using these Model milk and milk products ( ).
a.10 years.
b. 5 years.
c. 3 years.
d. 2 years.
14) Which factor do you consider to selling Model milk and milk products.( ).
a. Quality.
b. Service.
c. Commission.
d. No leakage and spoilage.
15) Are you satisfied with the service offered by Model Dairy ( ).
a. Yes
b. No
91