PROJECT

RESEARCH
REPORT
on
Study of Identifying
factors behind
decreasing market share
and study of consumer
behaviour
SUBMITTED FOR
PARTIAL FULFILMENT
OF THE DEGREE
OF

MASTER OF

Supply Chain Management

1) Milk Procurement: - Mother Dairy sources its requirement of liquid milk
from dairy co-operatives and producer institutions. Milk is received from farmer
cooperatives through insulated tankers at 2C temperature in order to retain its
freshness.

2) Milk distribution: -Tankers in the morning and in the evening bring in milk
from the regional collection centres. After collection the same tankers are
utilized for the delivery of the processed milk to the distributors. Mother Dairy
has about 51 Distributors in the city of Delhi. Each of these LADs(Local area
distributor ) place their demand by raising an invoice one day in advance. The
demand is also calculated using the Calendar Scheme, in this depending on
the pre-calculated seasonal demands the outlets place their orders accordingly.
In order to satisfy immediate demand, 20 to 25 tankers are provided with a
buffer stock of 500 litres each day so that they can be mobilized to cater the
demand in an area. To coordinate its operations all the tankers are equipped with
HAM radios.

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Distribution Channels:
a) Token Distribution: Also, termed as Lohe ki bhains (metal buffalo), is an
automated milk vending machine.
b) Distributors: The packaged milk is distributed via the distributor network
throughout the city.

Processing
At mother dairy, the processing of milk is done by process automation whereby
state of the art microprocessor technology is adopted to integrate and
completely automate all functions of the milk processing areas to ensure high
product quality/reliability and safety. There are four ways of milk processing
Firstly, Clarification, in which milk is spun at very high speed, removing all
dust particles that are invisible to the naked eye.
Secondly, Standardisation which help to maintain uniformity by raising or
lowering its fat and SNF (solid not fat) percentage to a desired levels, so as to
deliver milk to consumers as per prescribed PFA norms.
Thirdly, it is Homogenization which improves palatability of milk and
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Finally, Pasteurization, which kills all pathogenic bacteria present in the milk
and thus making it safe for consumption.
Quality Control
Stringent quality control methodologies are employed in Mother Dairy.
a) The milk is tested for adulterations and quality at the time of collection from the
farmers.
b) The Milk that comes from the collection points to the Mother Dairy plant is
ensured to have a temperature of not more than 4C and is subjected to 15
product and quality checks.
c) The Milk quality is checked repeatedly after each processing phase and the
temperature is judiciously maintained less than 4C always.
d) Before the milk leaves the plant for the delivery/distribution outlets the milk is
tested again.
e) The temperature of milk in the delivery trucks is always maintained less than
4C.
f) All the trucks that deliver milk have specified guidelines to bring back 100 litres
of milk after distribution. This is done in order to test the delivered milk and to
ensure that the tankers are not adulterated during distribution.
g) Since all the employed processing procedures are automated, no contamination
by human hands takes place.
h) To ensure milk freshness the collection and distribution points are always
chosen such that the travel time between them is always less than 36 hours.
Out of the total production about 9% goes directly to the institutions ,23% is
the loose token milk and the rest is distributed through LADs.

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COMPETITOR ANALYSIS

AMUL

Amul is the acronym for Anand Milk Union Limited, a dairy cooperative
company in Gujarat, India that markets a wide range of products including
milk powders, milk, butter, ghee, cheese, chocolate, Shrikhand, Gulab Jamun,
ice cream, cream, and others making it the largest food brand in India. Amul has
spurred the White Revolution of India, which has made India the largest
producer of milk and milk products in the world. It is one of the best examples
of co-operative achievement in the developing economy. Amul entered the
pouched milk market in Delhi in 2005 and then onwards giving a tough
competition to Mother dairy .Presently Amul has a 40 % market share in the
branded milk segment.
Product

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The varieties of Amul milk available in Delhi are :

Amul Taaza Toned Milk 3% fat
Amul Gold Full Cream Milk 6% fat
Amul Slim & Trim Double Toned Milk 1.5% fat
Amul Tea Special
At Amul skim milk powder is procured from the cooperatives of Gujarat which
is much superior in quality when compared to the cooperatives of West Bengal
leading to better quality of products.
Price
When compared to Mother dairy , the distributors margin of Amul is .50p/ltr
whereas Mother dairy gives .30p/ltr .In case of retailers Mother dairy has fixed
margin in every part of West Bengal .However Amul gives different margins
depending upon the location and sale of the retailer which becomes a great
incentive to sale. The price of the milk to the end consumer is however similar
to Mother Dairy.

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Place
The availability of milk is a major concern among the consumers. Amul with its
vast distribution network has enhanced the market and is responsible for its
growth. Amul has made pouched milk available in almost all suburbs of West
Bengal where we cannot find Mother dairy even today. Mother dairy is not able
to cater to those markets because their size is comparatively small and with the
current retailers and distributors margin there is hardly any profit left to them
because the expenditure is much more.
Promotion
Amul has a great brand image in the mind of the customer .Their expert
marketing and advertising strategies add all the more to the sales.

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STUDY OF DISTRIBUTORS AND RETAILERS

The study of distributors and retailers was conducted on a part of North Delhi
,ie,Maniktala , Shyambazar , Ahmerst street , Raja Bazar , Malik Bazar, New
Market , Dalhousie , Minto Park , Esplanade , Dharamtala , A.J.C.Road . The 3
major distributors in the area were interviewed. They are :
Five Star Distributor
40A, W C Banerjee Street
Delhi-700006
A.S.Milk
2A , Scotland Lane
Delhi-700009
Jyoti Gupta
133/C , Raja Ram Mohan Sarani
Delhi-700009
Ph : 98319-50986
The method of personal interview and questionnaire was adopted to get the
insights. The following mode of operation was found out through interviews :

An agreement is done by the company with the LAD for payment of a security
deposit

The LAD will receive the delivery of poly pouch milk at the scheduled
place mutually agreed upon and to sell the same to the third party retailers
in the area specified by the dairy
The milk shall be sold by the LAD to the retailer already existing in that area and
further outlets to be developed by the LAD
The agreement made at the beginning of the contract with the LAD shall remain
valid for a specified period of time and shall be terminated on the
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expiry of the period unless it is extended or renewed for any further

period by mutual agreement

The LAD will take the delivery of the exact quantity of packaged milk
supplied by the dairy in its place against the indent placed by the LAD
the previous day. The Lad shall pay the cost of milk against the delivery
of milk by an account payee cheque or bankers cheque
The operational area of LAD shall be decided by mutual consent and may be
increased or decreased as per the decision of dairy from time to time
The LAD shall increase the sales by at least 10% over and above the present sales
within 3 months

The LAD shall be responsible for delivery of milk in good condition and
in time to various outlets by his own arrangements of transport and
manpower
If at any time the milk is found unfit for human consumption due to mishandling
or bad storage by the LAD , strict action will be taken
The LAD is solely responsible for maintaining the sealing , quality , packaging ,
etc. of the milk packets received from the dairy
The milk once delivered to the LAD shall not be returned to the dairy at anytime
and under any circumstances
The LAD shall also be responsible to leverage out the benefits given to the
retailers by the company from time to time

The results of the questionnaires filled by Lad are given below :-

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RESEARCH METHODOLOGY
Purpose
The basic purpose of this research is to find out the factors affecting the
decision of the consumer to purchase milk
Problem
To find out problem is the first stage of the research process. It represents
translating the management problem into research problem. It is rightly said, A
problem well defined is half solved.
Consumers have faith in the brand image of Mother dairy, still its losing share
to Amul and other local brands
Objectives
The objectives of the study are as follows:
1) The objective of the study was to find the actual reason why people are
not buying Mother dairy

SAMPLE
Sampling Frame:
A Sampling frame consists of a list of item from which the sample is to be
drawn.
The sample frame for this research constitutes the customers visiting retail
outlets to purchase milk in North and East Delhi.
Sample Size:
The sample size of the research was 315 individuals.

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Methodology:
Initially 25 factors were identified to carry on the survey through an
analysis. This was further cleaned into a list of questions in a questionnaire
(refer annexure). Once framed and properly fragmented, these were
individually filled for a process of Descriptive Research. A cross-board
survey was undertaken involving consumers of milk in east and north Delhi.
This gave a congregated set of 314 responses which were then segregated
and keyed into SPSS. SPSS was extensively used to narrow down the
factors into components.

DATA INTERPRETATION

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Interpretations :
Earlier Mother dairy itself used to distribute milk directly to the local retailers,
the distribution of milk through LADs started only last year. Since the
distributors are new they hardly have any complain regarding retailers drop out
within the year of work. However sales were largely affected due to competition
from other local brands which are coming up daily with new schemes.
According to the distributors, the margin was not sufficient to meet their
expenses. Their profit remains negligible. Among the competitors also Mother
dairys margin is the lowest. Again there is no incentive to work hard. The
targets given by the company were not realistic and hence were not achieved.
Their view about the quality of milk is also not satisfactory. According to them
there is no consistency in the quality, which becomes a major reason of low
consumer demand. When it comes to competitiveness Mother dairy lacks
behind many brands and especially Amul which has captured the market with its
mass advertisements and fine quality of product.
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Apart from the survey with the three LADs ,others were also
contacted in order to solve their grievances .The report prepared is
shown below :
29

After the distributors, the retailers were also interviewed in the similar manner.
About 50 representative retailers were chosen for the purpose through
convenience sampling.
Data interpretation

30
31

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Interpretations :
During the interview most of the retailers were satisfied by their sales
considering the location and competition in the market , however few who were
not , considered decreasing quality as a reason of loss of sales apart from
competition with other brands. Also it was witnessed that their is no competition
from local dairy owners because they have a fairly differentiated market.
According to the majorty the major competitor is Amul , with its vast marketing
strategies , immense brand image and enormous quality of products, it has
successfully captured the market.However few of the retailers also believed that
the local brands like Red Cow,Thacker dairy,Amrit Fresh,Delight etc are
emerging as great competitors .These brands are new and are giving huge
margins and incentives , which is leading to push sales.
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The margin of amul and Mother dairy is almost same in the area , however
when compared to local brands it is quiet less. When it comes to
competitiveness according to the retailers Mother dairy is not performing upto
the mark.Their strategies does not meet their competitors. Brands like Red Cow
offer huge discounts to their retailers whereas Mother dairy has no such
schemes.
Thus through applying root cause analysis we can come out with the main
problems of distributors and retailers leading to decreasing market share. The
fish bone diagram demonstrating the reasons is shown below:

Competition from local brands was one of the most contributing factor in
decreasing market share. The local brands not only give high margin to the
retailers but they also have great incentive schemes available for them thus
influencing them for higher sales.
Quality is the next major problem. There is no consistency in the colour or smell
of the milk .Milk is judged by its thickness, which again has the same issue.
Many retailers complained that sometimes the milk has a distinguishable

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bad smell which annoys customers. Also there is a concern that the milk gets
spoiled very easily compared to Amul.
Mother dairy has an incentive plan according to which the distributors are
supposed to increase sales incrementally by 1% every month. This target if
achieve give the distributors an incentive of .05p/ ltr on their total sales for the
year. In order to fulfil the target and increase the sale, the distributors give the
retailers a part of their incentive,say .03p/ ltr. But even then it becomes very
hard for the retailers to increase sale as the demand in the market is limited.
Thus in these cases the only measure left is to increase sale through opening up
of new retail points.
Here we can see the lack of initiative of the distributors and the company.
During the survey it was found that there were a lot of gaps in the area of the
distributors. There was an unmet demand in the market. The distributors accept
that because of lack of initiative they were unable to meet the requirements.
During my project I identified few of them and thus new retail sale points were
allotted.

CONCLUSION

This project was about the milk segment of Mother Dairy which due to intense
competition from its competitors is continuously losing its market share. So in
this project different parameters on which the sale of Mother Dairy depends are
studied and analysed from the distributor, retailer and consumers perspective.
The final outcome of the project is that the parameters which make decision
regarding the purchase of milk are Price , Quality, Smell , Taste ,
Advertisement and Awareness. Milk market is a totally unpredictable market
and the organisation should be over-cautious of any complaints that come into
milk as it includes the sentiments of a mother for her kid and she would not
prefer to give anything to her kid for which she is not 100% satisfied. So the
company should take every step possible to contain these problems which in
some way or the other affects the sale of Mother Dairy and its retailers.

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LIMITATIONS

The limitations of the project is as follows :

1. The study was conducted in North and Central Delhi only ,so the limited
area of the study may affect the conclusions
2. Some of the respondents could not give their proper response due to lack
of time. They at times tend to get biased and project a rosy picture which
may affect the reliability and relevance of the study
3. It might also be so that some respondents were not motivated enough to
respond properly although full attempt was made to keep it as unbiased as
possible.
4. There was no provision of visiting cards for the summer trainees which
hinder communication at times
5. The duration of the project was short, so the scope of more in-depth
evaluation was not possible

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RECOMMENDATIONS

The recommendations for the company for further growth and profit are as
follows:
Mother dairy should come up with schemes for customers along with
retailers as it would be a real boost to the sales and also it will help the
company to get back its lost customers
During the survey it was found that many of the retailers were
uninterested because they were concerned about the storage of milk.
Instead of refrigerators if dry ice boxes can be supplied free of cost, sale
would be increased. Also it would be economical and convenient. Later, if
the retailer drops out , the box can be collected back.
It was seen that the price of the largest selling variety of Mother dairy
which is cow milk is Rs 24/ltr , and the competitor product of Amul is
priced at Rs 25/ltr. Thus the price can be increased and thereby margin of
the retailers can be increased
Also it was seen through the survey that price is not a major concern for
the consumers when it comes to a necessity like milk so the price can be
increased by a rupee or two and the quality can be improved
Mother Dairy is ISO and HACCP certified. The consumers should be
explained about it through advertisements in order to make them aware
The organisation should schedule these kinds of surveys on a more
regular basis as at this point of time Amul is really capturing the market
and the organisation should take viable steps to meet the expectations of
its customers
If MD can do certain promotions as its competitor AMUL does, then it
can attract sales. Promotion with the help of boards, hoardings etc. and
also it can advertise in radio
It was found during survey that Mother dairy milk gets spoiled quickly,
thus a preservative known as costic which is used by Amul can be applied
to produce milk
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 In order to improve and maintain quality, total quality management

measures should be appointed. It was seen that due to lack of fixed
percentage of raw milk mixed, the quality gets hampered and remain
unsteady. The extra milk procured should be used for production of milk
products which are in short supply and raw milk should be
proportionately used in milk production
The smell in milk is because of the usage of skim milk powder beyond a
certain point of time, this should be looked into by the manufacturing
department and alternative measure should be used
The company should try to adopt a relatively short period incentive
system in order to make it more friendly and achievable
The milk rejected by Mother dairy due to sub-standard is used by other
local dairy owners and hence their quality is much inferior. This should
be advertised
Mother dairy should come up with a scheme for consumers like discount
on Mother dairy Ice cream or any other product on supplying empty
pouch packets of Mother dairy milk
Differential margin should be given by the LADs to the retailers
depending upon the location and sales
LADs should be directed to supply milk to small retailers according to
their preference of time ,sometimes late by 6.30 -7.30
LADs should supply milk through cycle vans and small trolleys also like
competitors to areas where trucks cannot go
Factory visits helped consumers a lot in understanding the product.LAD
should organize the same with the help of MDC officials

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REFERENCES

http://www.motherdairycalcutta.com/
http://en.wikipedia.org/wiki/Main_Pag e

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ANNEXURE
Questionnaire

DISTRIBUTOR
1.
2.
3.
4.

Name Address Phone Avg daily sales (in lts):

1500 3500
3500 - 5500
5500 7500
7500 9500
9500+

5. How would you rate your retailers drop out?

Satisfactory
Unsatisfactory
6. Which type of milk sells the most?

DTM
TM
FCM
CM
SM

7. Rate Mother dairy on the scale of 1-5 on the following factors ( 1 as worst and
5 as best) :Particulars

Margin
Timeliness
Credit limit
Incentives
Demand of
retailers
Quality
Packaging
Hygiene
Competitiveness
8. Is there any scope to increase the no of retailers in your area ?
YES
NO
9. Suggestions/Complains :
*---------------------------*

RETAILER
1.
2.
3.
4.
5.

Name of shop Address Phone Lad name Avg daily sales (in lts):

10-50
50 150
150 300
300 450
450

6. How would you rate your present sales?

Satisfactory
Unsatisfactory
7. If the answer to the above is unsatisfactory then please choose the reasons
from below:
Competition from other brands
Competition from local dairy owners
Others
8. Which type of milk sells the most?

DTM
TM
FCM
CM
SM
9. Who is the major competitor of Mother dairy?
Amul
Metro Dairy
Red Cow

 Others

11. Suggestions/Complains :-

*---------------------------*

CONSUMER
1. Name 2. Address 3. Avg daily consumption (in lts):a) .5 - 1
4.
a)
b)
c)
d)
e)

b) 1 2

c) 2 3

d) 3 +

The brand that comes to mind when it comes to purchase of milk

Amul
Mother Dairy
Red Cow
Thacker Dairy
Others

5.Do you get delivery of milk at your home ?

a) YES

b) NO