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Fmcg mother dairy

  1. 1. Summer internship PROJECTAs partial fulfilment of requirements for the award of Post Graduate Diploma in Business ManagementReport on Identifying factors behind decreasingmarket share and study of consumer behaviour Submitted to :- Prof. R.J.Masilamani Submitted by :- Arpita Gupta PGDM 09DM024
  2. 2. CERTIFICATEThis is to certify that Miss. Arpita Gupta, has completed her summer internshipat Mother Dairy, and has submitted this project report entitled Identifyingfactors behind decreasing market share and a study of consumer behaviourtowards partial fulfilment of the requirements for the award of the PostGraduate Diploma in Business Management .This Report is the result of her own work and to the best of my knowledge nopart of it has earlier comprised any other report, monograph, dissertation orbook. This project was carried out under my overall supervision.Date:Place: ---------------------------------- Internal Faculty Guide Summer Internship Report, PGDM 09-11 | 1
  3. 3. ACKNOWLEDGEMENTThe satiation and euphoria that accompany the successful completion of theproject would be incomplete without the mention of the people who made itpossible.I would like to take the opportunity to thank and express my deep sense ofgratitude to my corporate mentor Mr. Dhiman Sen and my faculty mentor Prof.R.J. Masilamani. I am greatly indebted to both of them for providing theirvaluable guidance at all stages of the study, their advice, constructivesuggestions, positive and supportive attitude and continuous encouragement,without which it would have not been possible to complete the project.I would also like to thank Mr. Amar Majumdar (Senior Marketing asst.) who inspite of busy schedule has co-operated with me continuously and indeed, hisvaluable contribution and guidance have been certainly indispensable for myproject work..I am thankful to Mr.K.P.Boral for giving me the opportunity to work withMother dairy and learn.I owe my wholehearted thanks and appreciation to the entire staff of thecompany for their cooperation and assistance during the course of my project.I hope that I can build upon the experience and knowledge that I have gainedand make a valuable contribution towards this industry in coming future. Summer Internship Report, PGDM 09-11 | 2
  4. 4. TABLE OF CONTENTSl No. Topic Pg No. 1 Executive summary 4 Introduction : 2  Need of the study 5  Objective of the study 3 Organisational Background 7 Literature Review :  Current scenario 4  Supply chain management 14  Distribution channels  Processing  Quality control 5 Competitor Analysis 19 6 Study of distributors and retailers 23 7 Research methodology 35 8 Conclusion 43 9 Limitations 44 10 Recommendations 45 11 References 47 12 Annexure 48 Summer Internship Report, PGDM 09-11 | 3
  5. 5. EXECUTIVE SUMMARYThe project was started on 8th of April after knowing all the relevantinformation about the different milk varieties available, under the guidance ofMr.Dhiman Sen (E.O.Officer).The first part of my project involves the study ofdistributors allocated to me Identification of their problem areas and helpingthem in order to increase sale. For this I used the method of personal interviewsand questionnaires. At the same time , they were being made aware of theincremental scheme of Mother dairy for the distributors. Along with thedistributors a study of retailers was conducted to better understand thegrievances and identify the gaps. For this I visited around 50 outlets in the area,ie, North and East Kolkata and spoke to them. I was also supposed to find outnew retail outlets and convince them to sell Mother dairy milk by showing themthe opportunity of getting attached with a big FMCG brand like Mother dairyand increase the customer base. Despite of summer and low demand I wassuccessful in persuading people and a number of new retail sale points weredeveloped and the sale was increased. The second part of my internship was thestudy of consumer attitude towards Mother dairy milk or more specifically thefactors affecting the decision of purchase of milk. For this a sample of 200consumers was taken and a factor analysis was carried on to find the decisionmaking factors. Summer Internship Report, PGDM 09-11 | 4
  6. 6. INTRODUCTIONNeed of the studyThe project was an attempt to know the reasons behind low sale of milk ofMother dairy in Kolkata. Despite of being the first in the industry,and havingthe first mover advantage and the brand name, the sale has fallen downincredibly due to competitors like Amul ,Metro dairy , Red Cow and others.There is a need to revamp the company and position it all over again in the mindof the consumers. In doing so firstly the grievances of the distributors and theretailers were required to be solved in order to encourage them for push sales.Secondly a study of consumers decision making factors is required in order tounderstand their priorities which can be worked upon. For this purpose aresearch is to undertaken to find out the market scenario.With the help of the responses given by the consumers and data analysis, thecompany will be able to understand its strengths, weakness , opportunities andthreats. The survey report submitted by me will assist the company to take rightdecisions to increase the turnover and market share.Objective of the studyThe objectives of the study are the following :- 1. The main objective of this project is to probe the reasons for decreasing market share of Mother Dairy and to find out the measures that can be adopted to increase the sales 2. To study the distribution channel in the retail chain of Mother Dairy 3. To identify the issues related to Mother Dairy retailers and distributors 4. To get the retailers feedback from specific regions 5. To add up new retailers in the area Summer Internship Report, PGDM 09-11 | 5
  7. 7. 6. To study Mother Dairy positioning in the mind of the consumers vis-à- vis competitors7. To find out the factors that affect consumers decision to purchase milk8. To find out short term problem in every sub-region that can be sorted out9. Suggesting viable recommendations to be implemented in the area Summer Internship Report, PGDM 09-11 | 6
  8. 8. ORGANISATIONAL BACKGROUNDMother Dairy was set up in 1974. Mother dairy Kolkata is a government ofWest Bengal project, was started under Operation Flood II of National DairyDevelopment Board . It was set up initially to cater to the demand of theKolkata urban agglomeration spread over the Kolkata Metropolitan area, later itreached out to the consumers of other districts also. The commissioning of theDairy started in July 1978. Initially, the management of Mother Dairy waslooked after by the National Dairy Development Board . On 24th March 1982 ,the then Honourable Chief Minister Shri Jyoti Basu dedicated Mother DairyCalcutta to the rural milk producers and urban milk consumers of West Bengal.Mother Dairy is an IS/ISO 9002, IS 15000 HACCP and IS 14001 EMS certifiedorganization. Moreover, its Quality Assurance Laboratory is certified byNational Accreditation Board for Testing and Calibration Laboratory (NABL)-Department of Science and Technology, Government of India.At Mother dairy milk is produced by mixing raw milk, white butter and skimmilk powder. Skim milk powder is made by mixing cow and buffalo milkobtained during breeding seasons through various co-operatives in West Bengaland converting them into powder in order to store for a longer period. Raw milkis obtained on a daily basis from the co-operatives. It is then stored in chillingplants and transferred to the Mother dairy factory through insulated tanks.While raw milk is stored in the cold chain at 2°C skim milk powder and whitebutter is stored under normal temperature. This milk is then pasteurised at 78° Cin order to make it free from germs and then it is homogenised.Mother dairy is presently selling Milk & Milk Products like Khatta Doi ,Flavoured Yoghurt, Plain yoghurt, Paneer, Ice cream and Packaged DrinkingWater. The entire product mix is shown below : Summer Internship Report, PGDM 09-11 | 7
  9. 9. Each of the product is further discussed in details :- MILKVarieties in Milk : Sl.No Product Fat Solid not Fat Water content (SNF) 1 Doble Toned Milk 1.5% 9.0% 89.5% 2 Toned Milk 3.0% 8.5% 88.5% 3 Full Cream Milk 6% 9% 75% 4 Cow Milk 3.5% 8.5% 88% 5 Skimmed Milk 0.5% 9.5% 90% Summer Internship Report, PGDM 09-11 | 8
  10. 10. Double toned MilkIt‟s fresh it‟s pure it‟s co-operative milk with assurance of Mother dairy. Motherdairy double toned milk - tasty and nutritious with low fat content. A dreamcome true , especially for all the calorie conscious people who love the taste ofmilk but are worried of its cream content. Mother dairy double toned milkcomplements your daily workout perfectly. So , to maintain complete harmonybetween your body and soul you‟ve got to “fresh and pure”.Toned MilkMother dairy bulk vended token milk – healthy and tasty to the last drop.Homogenised to evenly distribute the cream content , it‟s thicker and a lot easierto digest. It‟s the magic of homogenisation that makes your kheer thicker andshake frothier. Fortified with Vitamin A , which not only is good for yourcomplexion but also helps prevent night blindness. What‟s more , it gives yourchildren the energy to stay active through work and playFull Cream Milk Summer Internship Report, PGDM 09-11 | 9
  11. 11. Mother dairy full cream milk - wholesome and healthy. Packed with energy andnutrition thats essential for growing kids. It makes them stronger from withinand keeps them active and healthy. So before they go to bed , and after they risegive them Mother dairy full cream milk to keep them healthy and wise and tosee them „grow faster‟.Cow MilkMother dairy‟s cow milk has a yellowish tinge due to presence of an elementcalled carotene and is a good source of Vitamin –A,B-12 and Vitamin D. Cowmilk is considered to be easily digestible. Whether poured on breakfast cereal orenjoyed alone as a cold glass of milk, this can be enjoyed year around.Skimmed MilkIn skimmed milk , as much of the fat as is possible is removed , yet it continuesto supply all the nutrients that full cream milk does. The young at heart wouldparticularly find it a tempting option. So its the best option to remain energeticand young.Margin (per ltrs) : Sl.No Product Distributor’s Retailer’s MRP Price Price 1 Doble Toned Milk 19.65 20.00 21.00 2 Toned Milk 20.75 21.10 22.00 3 Full Cream Milk 25.45 25.80 27.00 4 Cow Milk 22.65 23.00 24.00 5 Skimmed Milk 17.65 18.00 19.00Shelf Life : 2 days under 4°CAverage Daily Sales (in ltrs) : 335000 lakh Summer Internship Report, PGDM 09-11 | 10
  12. 12. Pattern of sale :Distribution Network : Summer Internship Report, PGDM 09-11 | 11
  13. 13. OTHER PRODUCTS Sl.No Product 1 Mishti Doi 2 Plain Yoghurt 3 Favoured Yoghurt a) Vanilla b) Green Mango c) Chocolate d) Pineapple 4 Paneer 5 Ice-cream 6 Packaged Drinking WaterMishti Doi Plain Yoghurt Flavoured Yoghurt Paneer Drinking Water Summer Internship Report, PGDM 09-11 | 12
  14. 14. Margin (per 100 gms) : Sl.No Product Distributor’s Retailer’s MRP Price Price 1 Mishti Doi 6.50 7.20 8.00 2 Plain Yoghurt 6.50 7.20 8.00 3 Favoured Yoghurt a) Vanilla b) Green Mango 6.50 7.20 8.00 c) Chocolate d) Pineapple 4 Paneer 17.50 18.50 20.00Shelf Life :Yoghurt : 8 days under 4°CIce-cream : 1 year under -18°CDrinking Water : 9 months under normal conditionsAverage Daily Sales :Yoghurt : 3600 KgsPaneer : 800 KgsIce-cream : 1200 kgs Summer Internship Report, PGDM 09-11 | 13
  15. 15. Distribution Network : Summer Internship Report, PGDM 09-11 | 14
  16. 16. LITERATURE REVIEWCURRENT SCENARIOMother dairy has a market share of around 33 % in the branded sector in WestBengal where it sells 3.4 lakh litres of milk daily on an average and undertakesits marketing operations through around 51 distributors and around 600 retailersin Kolkata itself. It has a huge advantage over its competitors as it is the onlyplayer when it comes to sale of loose milk through token. Before the entrance ofcompetitors like Amul ,sale of loose milk through Mother Dairy booths wasaround 35 % of the entire sale in branded segment , when Mother dairy was theonly player in the market. However since last five years the sale is continuouslydeclining and presently it is just 8-9 %. Summer Internship Report, PGDM 09-11 | 15
  17. 17. Summer Internship Report, PGDM 09-11 | 16
  18. 18. Supply Chain Management1) Milk Procurement: - Mother Dairy sources its requirement of liquid milkfrom dairy co-operatives and producer institutions. Milk is received from farmercooperatives through insulated tankers at 2°C temperature in order to retain itsfreshness.2) Milk distribution: -Tankers in the morning and in the evening bring in milkfrom the regional collection centres. After collection the same tankers areutilized for the delivery of the processed milk to the distributors. Mother Dairyhas about 51 Distributors in the city of Kolkata. Each of these LAD‟s(Localarea distributor ) place their demand by raising an invoice one day in advance.The demand is also calculated using the „Calendar‟ Scheme, in this dependingon the pre-calculated seasonal demands the outlets place their ordersaccordingly. In order to satisfy immediate demand, 20 to 25 tankers areprovided with a buffer stock of 500 litres each day so that they can be mobilizedto cater the demand in an area. To coordinate its operations all the tankers areequipped with HAM radios. Summer Internship Report, PGDM 09-11 | 17
  19. 19. Distribution Channels:a) Token Distribution: Also, termed as “Lohe ki bhains” (metal buffalo), is anautomated milk vending machine.b) Distributors: The packaged milk is distributed via the distributor networkthroughout the city.ProcessingAt mother dairy, the processing of milk is done by process automation wherebystate of the art microprocessor technology is adopted to integrate andcompletely automate all functions of the milk processing areas to ensure highproduct quality/reliability and safety. There are four ways of milk processing –Firstly, Clarification, in which milk is spun at very high speed, removing alldust particles that are invisible to the naked eye.Secondly, Standardisation which help to maintain uniformity by raising orlowering its fat and SNF (solid not fat) percentage to a desired levels, so as todeliver milk to consumers as per prescribed PFA norms.Thirdly, it is Homogenization which improves palatability of milk and Summer Internship Report, PGDM 09-11 | 18
  20. 20. Finally, Pasteurization, which kills all pathogenic bacteria present in the milkand thus making it safe for consumption.Quality ControlStringent quality control methodologies are employed in Mother Dairy.a) The milk is tested for adulterations and quality at the time of collection fromthe farmers.b) The Milk that comes from the collection points to the Mother Dairy plant isensured to have a temperature of not more than 4°C and is subjected to 15product and quality checks.c) The Milk quality is checked repeatedly after each processing phase and thetemperature is judiciously maintained less than 4°C always.d) Before the milk leaves the plant for the delivery/distribution outlets the milkis tested again.e) The temperature of milk in the delivery trucks is always maintained less than4°C.f) All the trucks that deliver milk have specified guidelines to bring back 100litres of milk after distribution. This is done in order to test the delivered milkand to ensure that the tankers are not adulterated during distribution.g) Since all the employed processing procedures are automated, nocontamination by human hands takes place.h) To ensure milk freshness the collection and distribution points are alwayschosen 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 theloose token milk and the rest is distributed through LAD‟s. Summer Internship Report, PGDM 09-11 | 19
  21. 21. COMPETITOR ANALYSISAMULAmul is the acronym for Anand Milk Union Limited, a dairy cooperativecompany in Gujarat, India that markets a wide range of products including milkpowders, milk, butter, ghee, cheese, chocolate, Shrikhand, Gulab Jamun, icecream, cream, and others making it the largest food brand in India. Amul hasspurred the White Revolution of India, which has made India the largestproducer of milk and milk products in the world. It is one of the best examplesof co-operative achievement in the developing economy. Amul entered thepouched milk market in Kolkata in 2005 and then onwards giving a toughcompetition to Mother dairy .Presently Amul has a 40 % market share in thebranded milk segment.Product Summer Internship Report, PGDM 09-11 | 20
  22. 22. The varieties of Amul milk available in Kolkata 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 SpecialAt Amul skim milk powder is procured from the cooperatives of Gujarat whichis much superior in quality when compared to the cooperatives of West Bengalleading to better quality of products.PriceWhen compared to Mother dairy , the distributors margin of Amul is .50p/ltrwhereas Mother dairy gives .30p/ltr .In case of retailers Mother dairy has fixedmargin in every part of West Bengal .However Amul gives different marginsdepending upon the location and sale of the retailer which becomes a greatincentive to sale. The price of the milk to the end consumer is however similarto Mother Dairy. Summer Internship Report, PGDM 09-11 | 21
  23. 23. PlaceThe availability of milk is a major concern among the consumers. Amul with itsvast distribution network has enhanced the market and is responsible for itsgrowth. Amul has made pouched milk available in almost all suburbs of WestBengal where we cannot find Mother dairy even today. Mother dairy is not ableto cater to those markets because their size is comparatively small and with thecurrent retailers and distributors margin there is hardly any profit left to thembecause the expenditure is much more.PromotionAmul has a great brand image in the mind of the customer .Their expertmarketing and advertising strategies add all the more to the sales.METRO DAIRYMetro Dairy was founded in the year 1994 as a new venture of Keventer AgroLtd. It was Indias first dairy project in public private partnership. A three-wayjoint venture was signed between West Bengal Milk Federation, Keventer andNDDB, forming Benmilk Keventer Limited to enhance milk supply in Kolkata.The initiative had a strong backbone of:  An ultra-modern, state-of-the-art plant - the most modern plant in Asia.  Fully equipped with complete automation and very high level quality and state-of-the-art control systems. Summer Internship Report, PGDM 09-11 | 22
  24. 24.  The fully automated plant restricts any hand touch right from the time milk is brought out from tankers till the point milk is finally packed.  World Bank funded the project under Operation Flood, Phase III with the objective of providing fair treatment to farmers and eliminating middle men.Having earned laurels in the milk industry, the Keventer Group extended to theice-cream category in 1998. In a handful of years, established itself as one of themajor competitor in the milk and ice-cream industry. Currently 20,000 litres ofice cream is produced per day. Summer Internship Report, PGDM 09-11 | 23
  25. 25. STUDY OF DISTRIBUTORS AND RETAILERSThe study of distributors and retailers was conducted on a part of NorthKolkata ,ie,Maniktala , Shyambazar , Ahmerst street , Raja Bazar , MalikBazar, New Market , Dalhousie , Minto Park , Esplanade , Dharamtala ,A.J.C.Road . The 3 major distributors in the area were interviewed. They are :Five Star Distributor40A, W C Banerjee StreetKolkata-700006Ph : 9831012141A.S.Milk2A , Scotland LaneKolkata-700009Ph : 9831016732Jyoti Gupta133/C , Raja Ram Mohan SaraniKolkata-700009Ph : 98319-50986 The method of personal interview and questionnaire was adopted to get theinsights. 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 Summer Internship Report, PGDM 09-11 | 24
  26. 26. 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 banker‟s 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 timeThe results of the questionnaires filled by Lad are given below :- Summer Internship Report, PGDM 09-11 | 25
  27. 27. Findings : Summer Internship Report, PGDM 09-11 | 26
  28. 28. Summer Internship Report, PGDM 09-11 | 27
  29. 29. Interpretations :Earlier Mother dairy itself used to distribute milk directly to the local retailers,the distribution of milk through LAD‟s started only last year. Since thedistributors are new they hardly have any complain regarding retailers drop outwithin the year of work. However sales were largely affected due to competitionfrom other local brands which are coming up daily with new schemes. According to the distributors, the margin was not sufficient to meet theirexpenses. Their profit remains negligible. Among the competitors also Motherdairy‟s margin is the lowest. Again there is no incentive to work hard. Thetargets 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 themthere is no consistency in the quality, which becomes a major reason of lowconsumer demand. When it comes to competitiveness Mother dairy lacksbehind many brands and especially Amul which has captured the market withits mass advertisements and fine quality of product. Summer Internship Report, PGDM 09-11 | 28
  30. 30. Apart from the survey with the three LADs ,others were also contacted in order to solve their grievances .The report prepared is shown below : FEEDBACK REPORT OF LOCAL AREA DISTRIBUTORS OF MOTHER DAIRY CALCUTTASL NATURE OF FEEDBACK LAD NO.NO. Commission is less in comparison to other1 99102,99003,99406 competitors brand 99102,99002,99105,99404,99104,99211,99212 Leakage/Packing/Packaging problem 9,99307,99203 Transport Problem (Vehicles are not reaching3 in time/Single vehicle supply is wanted by 99201,99307,99223,99207,99219,99403 LAD) DTM quality is very bad /thinner as compared4 99003,99102,99219 to other companies Market visit required jointly with MDC5 99201,99216,99215,99307 officials for effective outcome6 Other LADs are infiltrating into the area 99102,99301,99103,99307,99201,99207 Lifespan of the product is small compared to7 99203,99105 other brands Short supply than indented quality on regular8 99307,99408,99411,99004 interval Interested to distribute other product of MDC9 99203,99101, but not getting No free gift products are supplied by MDC on10 certain amount of sale to LADs as given by 99003 other competitor companies No advertisement material given by the11 99404,99102,99405,99201,99402,99305 company12 Incentive scheme circular required 9941113 Banking problem 9940914 Curdling problem 99211,9900215 Better incentive plans should be implemented 9910416 Milk comes in Horizontal position 99211,99218,99219,99408 Summer Internship Report, PGDM 09-11 | 29
  31. 31. After the distributors, the retailers were also interviewed in the similar manner.About 50 representative retailers were chosen for the purpose throughconvenience sampling.Findings: Summer Internship Report, PGDM 09-11 | 30
  32. 32. Summer Internship Report, PGDM 09-11 | 31
  33. 33. Summer Internship Report, PGDM 09-11 | 32
  34. 34. Interpretations :During the interview most of the retailers were satisfied by their salesconsidering the location and competition in the market , however few who werenot , considered decreasing quality as a reason of loss of sales apart fromcompetition with other brands. Also it was witnessed that their is nocompetition from local dairy owners because they have a fairly differentiatedmarket.According to the majorty the major competitor is Amul , with its vast marketingstrategies , immense brand image and enormous quality of products, it hassuccessfully captured the market.However few of the retailers also believed thatthe local brands like Red Cow,Thacker dairy,Amrit Fresh,Delight etc areemerging as great competitors .These brands are new and are giving hugemargins and incentives , which is leading to push sales. Summer Internship Report, PGDM 09-11 | 33
  35. 35. The margin of amul and Mother dairy is almost same in the area , howeverwhen compared to local brands it is quiet less. When it comes tocompetitiveness according to the retailers Mother dairy is not performing uptothe mark.Their strategies does not meet their competitors. Brands like Red Cowoffer huge discounts to their retailers whereas Mother dairy has no suchschemes.Thus through applying root cause analysis we can come out with the mainproblems of distributors and retailers leading to decreasing market share. Thefish bone diagram demonstrating the reasons is shown below:Competition from local brands was one of the most contributing factor indecreasing market share. The local brands not only give high margin to theretailers but they also have great incentive schemes available for them thusinfluencing them for higher sales.Quality is the next major problem. There is no consistency in the colour orsmell of the milk .Milk is judged by its thickness, which again has the sameissue. Many retailers complained that sometimes the milk has a distinguishable Summer Internship Report, PGDM 09-11 | 34
  36. 36. bad smell which annoys customers. Also there is a concern that the milk getsspoiled very easily compared to Amul.Mother dairy has an incentive plan according to which the distributors aresupposed to increase sales incrementally by 1% every month. This target ifachieve give the distributors an incentive of .05p/ ltr on their total sales for theyear. In order to fulfil the target and increase the sale, the distributors give theretailers a part of their incentive,say .03p/ ltr. But even then it becomes veryhard 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 upof 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 thedistributors. There was an unmet demand in the market. The distributors acceptthat 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 wereallotted. The details of the sale points generated are : Quantity of milkSL.No Name of the owner Address (in ltres) 1 Pal Stores/ 177A, A.P.C.Road 20 Biswajit Pal Kol-4 2 25,Sahitya Parishad St 20 Satkari Ghosal Kol-6 3 New Bengal Dairy/ 274,Rabindra Sarani 50 J.P.Jain Kol-7 4 Tara Fancy Store/ 242, Rabindra Sarani 20 Sanjay Harsh Kol-7 Summer Internship Report, PGDM 09-11 | 35
  37. 37. RESEARCH METHODOLOGYPurposeThe basic purpose of this research is to find out the factors affecting thedecision of the consumer to purchase milkProblemTo find out problem is the first stage of the research process. It representstranslating the management problem into research problem. It is rightly said, “Aproblem well defined is half – solved.”Consumers have faith in the brand image of Mother dairy, still its losing shareto Amul and other local brandsObjectivesThe 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 dairySAMPLESampling Frame:A Sampling frame consists of a list of item from which the sample is to bedrawn.The sample frame for this research constitutes the customers visiting retailoutlets to purchase milk in North and East Kolkata.Sample Size:The sample size of the research was 315 individuals. Summer Internship Report, PGDM 09-11 | 36
  38. 38. 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 (referannexure). Once framed and properly fragmented, these were individually filledfor a process of Descriptive Research. A cross-board survey was undertakeninvolving consumers of milk in east and north Kolkata. This gave a congregatedset of 314 responses which were then segregated and keyed into SPSS. SPSSwas extensively used to narrow down the factors into components.KMO AND BARTLETTS TEST OF SPHERICITYKMO:The KMO measures the sampling adequacy which should be greater than 0.5for a satisfactory factor analysis to proceed. The measure of sampling adequacy(MSA) is .614 for the variables we initially taken for the considerationBartlett test of sphericity:In accordance with the requirement of the test for principal component analysis,the value should lie well above the significance level. Here in our experimentthe value (.00) does lie well above the pre-determined level of significance. KMO and Bartletts Test Kaiser-Meyer-Olkin Measure of Sampling Adequacy. .614 Bartletts Test of Sphericity Approx. Chi-Square 4228.375 Df 300 Sig. .000 Summer Internship Report, PGDM 09-11 | 37
  39. 39. Communalities :Communalities indicate the amount of variance in each variable that isaccounted for. Initial communalities are estimates of the variance in eachvariable accounted for by all components or factors. Extraction communalitiesare estimates of the variance in each variable accounted for by the factors (orcomponents) in the factor solution. Small values (red) indicate variables that donot fit well with the factor solution, and should possibly be dropped from theanalysis. In a good factor analysis, the expected values of communalities foreach variable should be more than 0.5. As it is observed from the table abovethat we have proper values of extraction for all variables and thus we haveaccepted all of them. Communalities Initial Extraction1_Decision to purchase milk 1.000 .705depends upon the quality of milk2_Price is the most important 1.000 .909decision making factor when itcomes to purchase of milk3_Milk purchase is determined by 1.000 .669the availability of milk whererequired4_Taste of milk does not affect the 1.000 .706purchase decision5_Hygiene is an important decision 1.000 .621making factor when it comes topurchase of milk6_Milk containing smell hampers 1.000 .614purchase of milk7_Decision to purchase milk 1.000 .528depends upon the ease of storage ofmilk Summer Internship Report, PGDM 09-11 | 38
  40. 40. 8_Price is not an important decision 1.000 .923making factor when it comes topurchase of milk9_Purchase of milk is determined 1.000 .710by the availability of milk whenrequired10_Milk containing smell is not at 1.000 .603all preferred11_Leakage in milk packets hinder 1.000 .715purchase decision12_Faith in the brand image 1.000 .782increases purchase decision of milk13_Schemes available on purchase 1.000 .705of a particular brand influencedecision14_Awareness about the 1.000 .669availability of milk influencespurchase decision15_Heavy advertisement increases 1.000 .591purchase of a particular variety ofmilk16_Purchase of milk varies with the 1.000 .672percentage of fat content17_Decision to purchase milk 1.000 .790depends upon the packaging of milk18_Availability of substitute 1.000 .883products does not affect purchasedecision19_A little increase in price when 1.000 .763milk delivered at doorstep is not amajor concern20_There is a satisfactory no of 1.000 .583retailers in the locality21_The colour of the milk affects 1.000 .747the purchase decision22_Decision to purchase milk 1.000 .681depends upon the retailer‟sreputation Summer Internship Report, PGDM 09-11 | 39
  41. 41. 23_Decision to purchase milk 1.000 .706depends upon the inconveniencesoccurred while purchasing24_Taste of milk affects the 1.000 .756purchase decision25_Availability of substitute 1.000 .894products affects purchase decisionExtraction Method: Principal Component Analysis. Summer Internship Report, PGDM 09-11 | 40
  42. 42. Total Variance Explained:The eigen value is a measure of the strength of an axis, the amount of variationalong an axis, and ideally the importance of an ecological gradient. The precisemeaning depends on the ordination method used. The eigenvectors are the samplescores, if the rows and columns of the initial matrix represent samples. Eigen valuesare the "characteristic roots" of the principal components solution. There is oneeigen value for each dimension, sometimes labelled the inertia for that dimension.Each eigen value is the amount of inertia (variance) a given factor explains in thecorrespondence table. It is called "Inertia" in SPSS output. Eigen values reflect therelative importance of the dimensions. The first dimension always explains themost inertia (variance) and has the largest eigen value, the next the second-most,and so on. The sum of eigen values is total inertia, discussed above.The Eigen Analysis for our Analysis is given below : Total Variance Explained Extraction Sums of Squared Initial Eigenvalues Loadings Rotation Sums of Squared LoadingsCompone % of Cumulative % of Cumulative % of Cumulativent Total Variance % Total Variance % Total Variance %1 4.423 17.691 17.691 4.423 17.691 17.691 3.901 15.604 15.6042 3.206 12.824 30.515 3.206 12.824 30.515 2.588 10.353 25.9583 2.472 9.886 40.401 2.472 9.886 40.401 2.290 9.162 35.1194 2.076 8.304 48.705 2.076 8.304 48.705 2.288 9.153 44.2725 1.994 7.976 56.681 1.994 7.976 56.681 1.864 7.458 51.7306 1.478 5.913 62.594 1.478 5.913 62.594 1.800 7.199 58.9297 1.250 4.998 67.592 1.250 4.998 67.592 1.626 6.502 65.4318 1.028 4.112 71.704 1.028 4.112 71.704 1.568 6.273 71.7049 .918 3.673 75.37710 .763 3.051 78.42811 .729 2.914 81.34212 .697 2.787 84.130 Summer Internship Report, PGDM 09-11 | 41
  43. 43. 13 .584 2.338 86.46714 .539 2.155 88.62215 .459 1.836 90.45816 .406 1.626 92.08417 .374 1.495 93.57918 .343 1.372 94.95019 .305 1.220 96.17120 .277 1.106 97.27721 .246 .985 98.26222 .190 .759 99.02123 .132 .527 99.54824 .081 .324 99.87225 .032 .128 100.000Extraction Method: Principal Component Analysis.SCREE PLOTA Scree Plot is a simple line segment plot that shows the fraction of total variancein the data as explained or represented by each PC. The PCs are ordered, and bydefinition are therefore assigned a number label, by decreasing order ofcontribution to total variance. The PC with the largest fraction contribution islabelled with the label name from the preferences file. Such a plot when read left-to-right across the abscissa can often show a clear separation in fraction of totalvariance where the most important components cease and the least importantcomponents begin. The point of separation is often called the elbow. (In the PCAliterature, the plot is called a Scree Plot because it often looks like a scree slope,where rocks have fallen down and accumulated on the side of a mountain.)The Scree plot for the analysis is given below: Summer Internship Report, PGDM 09-11 | 42
  44. 44. Summer Internship Report, PGDM 09-11 | 43
  45. 45. CONCLUSIONThis project was about the milk segment of Mother Dairy which due to intensecompetition from its competitors is continuously losing its market share. So inthis project different parameters on which the sale of Mother Dairy depends arestudied and analysed from the distributor , retailer and consumers perspective.The final outcome of the project is that the parameters which make decisionregarding the purchase of milk are Price , Quality, Smell , Taste ,Advertisement and Awareness. Milk market is a totally unpredictable marketand the organisation should be over-cautious of any complaints that come intomilk as it includes the sentiments of a mother for her kid and she would notprefer to give anything to her kid for which she is not 100% satisfied. So thecompany should take every step possible to contain these problems which insome way or the other affects the sale of Mother Dairy and its retailers. Summer Internship Report, PGDM 09-11 | 44
  46. 46. LIMITATIONSThe limitations of the project is as follows :1. The study was conducted in North and Central Kolkata only ,so the limited area of the study may affect the conclusions2. 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 study3. 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 times5. The duration of the project was short, so the scope of more in-depth evaluation was not possible Summer Internship Report, PGDM 09-11 | 45
  47. 47. RECOMMENDATIONSThe recommendations for the company for further growth and profit are asfollows:  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 Summer Internship Report, PGDM 09-11 | 46
  48. 48.  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 Summer Internship Report, PGDM 09-11 | 47
  49. 49. REFERENCES Summer Internship Report, PGDM 09-11 | 48
  50. 50. ANNEXURE QuestionnaireDISTRIBUTOR1. Name -2. Address -3. Phone -4. Avg daily sales (in lts):-  1500 – 3500  3500 - 5500  5500 – 7500  7500 – 9500  9500+5. How would you rate your retailers drop out?  Satisfactory  Unsatisfactory6. Which type of milk sells the most?  DTM  TM  FCM  CM  SM7. Rate Mother dairy on the scale of 1-5 on the following factors ( 1 as worst and 5 as best) :- Summer Internship Report, PGDM 09-11 | 49
  51. 51. Particulars 1 2 3 4 5MarginTimelinessCredit limitIncentivesDemand ofretailersQualityPackagingHygieneCompetitiveness8. Is there any scope to increase the no of retailers in your area ?  YES  NO9. Suggestions/Complains : *---------------------------*RETAILER 1. Name of shop - 2. Address - 3. Phone - 4. Lad name - 5. Avg daily sales (in lts):-  10 – 50 Summer Internship Report, PGDM 09-11 | 50
  52. 52.  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 10. Rate Mother dairy on the scale of 1-5 on the following factors ( 1 as worst and 5 as best) :- Particulars 1 2 3 4 5Margin Summer Internship Report, PGDM 09-11 | 51
  53. 53. Punctuality ofdistributorsCompetitivenessQualityPackagingAwareness 11. Suggestions/Complains :- *---------------------------*CONSUMER 1. Name - 2. Address - 3. Avg daily consumption (in lts):- a) .5 - 1 b) 1 – 2 c) 2 – 3 d) 3 + 4. The brand that comes to mind when it comes to purchase of milk – a) Amul b) Mother Dairy c) Red Cow d) Thacker Dairy e) Others5.Do you get delivery of milk at your home ? a) YES b) NO Summer Internship Report, PGDM 09-11 | 52
  54. 54. SL Attributes Strongly Agree Neither Disa StronglyR agree agree nor gree disagreeNo. disagree1 Decision to purchase milk depends upon the quality of milk2 Price is the most important decision making factor when it comes to purchase of milk3 Milk purchase is determined by the availability of milk where required4 Taste of milk does not affect the purchase decision5 Hygiene is an important decision making factor when it comes to purchase of milk6 Milk containing smell hampers purchase of milk7 Decision to purchase milk depends upon the ease of storage of milk8 Price is not an important decision making factor when it comes to purchase of milk9 Purchase of milk is determined by the availability of milk when required10 Milk containing smell is not at all preferred11 Leakage in milk packets hinder purchase decision12 Faith in the brand image increases purchase decision of milk13 Schemes available on purchase of a particular brand influence decision Summer Internship Report, PGDM 09-11 | 53
  55. 55. 14 Awareness about the availability of milk influences purchase decision15 Heavy advertisement increases purchase of a particular variety of milk16 Purchase of milk varies with the percentage of fat content17 Decision to purchase milk depends upon the packaging of milk18 Availability of substitute products does not affect purchase decision19 A little increase in price when milk delivered at doorstep is not a major concern20 There is a satisfactory no of retailers in the locality21 The colour of the milk affects the purchase decision22 Decision to purchase milk depends upon the retailer‟s reputation23 Decision to purchase milk depends upon the inconveniences occurred while purchasing24 Taste of milk affects the purchase decision25 Availability of substitute products affects purchase decision *---------------------------* Summer Internship Report, PGDM 09-11 | 54