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  1. 1. Summer Internship ProjectReport Project Title: Consumer Behavior& factoraffecting switching of brands at retail level Submitted by Name of Student: Subhojit Dasgupta Registration No.: 1101018 Under Guidance by Faculty Mentor’s name: Prof Nidhi.S.Bisht Company Mentor’s name: Mr. Javed Hasan (Area Incharge) SRMS INTERNATIONAL BUSINESS SCHOOL, UNNAO LUCKNOW 1
  2. 2. CERTIFICATEThis is to certify that Mr. Subhojit Dasgupta, has completed his summer internship atReliance Food & Dairy Ltd., and has submitted this project report entitled Consumerbehavior & factor affecting switch-off brand at retail level and a study of consumer behaviortowards partial fulfillment of the requirements for the award of the Post Graduate Diploma inBusiness ManagementThis Report is the result of her own work and to the best of my knowledge no part of it hasearlier comprised any other report, monograph, dissertation or book. This project was carriedout under my overall supervision.Date:Place:---------------------------------- Internal Faculty Guide 2
  3. 3. DECLARATION FORMI hereby declare that the project work entitled….………………………………………………… Submitted by me for the SummerInternship during the post Graduate Diploma in Management program to Shri Ram MurtiSmarak International Business School is my own original work and has not been submittedearlier to SRMS IBS or to any other institution for the requirement for any course of study. Ialso declare that no chapter of this manuscript in whole or in part is lifted and incorporated inthis report from any earlier /other work done by me or others.Place:Date: Sign of studentName of Student: ………………………………………………………………………………Address: ………………………………………………………………………… …………………………………………………………………………… …………………………………………………………………………… 3
  4. 4. ACKNOWLEDGEMENTSAt the very outset, we would like to express our heartfelt gratitude to ―Reliance Dairy FoodsLtd‖ for allowing me to do a project on consumer perception. I felt this project interestingand challenging one. Our thanks are due to Mr. A Abraham who was very kind in explaininghow to use the challenges that lay ahead us.We feel indebted to Mr. N Mundepi for explaining to us the intricacies and peculiarities ofmilk business which came handy on various occasions and allowed us to retain our focus andfinish our research with the satisfaction of a job well done.We would also like to commit our hearty thanks to Mr. Javed Hasan for their help andvaluable support throughout the project term. It was a great learning experience to workunder their guidelines.We are extremely thankful to my faculty guide Dr. Nidhi.S.Bisht at SRMS IBS for hisinvaluable guidance and suggestion during our training.In the end we would like to say that it was a great experience working on this project. 4
  7. 7. EXECUTIVE SUMMARY The project was started on 7th of May after knowing all the relevant information aboutthe different milk varieties available, under the guidance of Mr.A Abraham (Zonal manager)&Mr. N. Mundepi.The first part of my project involves the study of distributors allocated tome Identification of their problem areas and helping them in order to increase sales andpromotion of brand. For this I used the method of personal interviews and questionnaires. Atthe same time, they were being made aware of the incremental scheme of Reliance dairy lifefor the distributors. Along with the distributors a study of retailers was conducted to betterunderstand the grievances and identify the gaps. For this I visited around 450 outlets in thearea, i.e., East Delhi & Noida and spoke to them. I was also supposed to find out new retailoutlets and convince them to sell Reliance dairy milk by showing them the opportunity ofgetting attached with a big FMCG brand like Reliance dairy and increase the customer base.India has emerged as the world‘s largest producer of milk. By 2003, milk production touchedthe 88 million tons (MT) mark. By 2002-03under the National dairy development board(NDDB), and Operation flood, 11.4 million cattle farmers had been organized into 103,281dairy cooperatives. Their collection of milk was estimated at 84.6 million liters and theirearning was in region of Rs 50 billion.Nearly 46 percent of total milk production. It means that 42.5 million tonesare consumed asliquid milk. 47 percent is converted into traditional product like ghee, paneer, curd, cottagebutter, Rabri ,Icecream , Lassi etc. Only 7 percent of the milk is used in the production ofthe western product like milk powder, processed butter. The unorganized sector accounts formore than 50 percent of all milk and dairy products. Out of total production of milk and dairyproduct worth Rs1600/ billion in 2003-04 and tradition dairy accounted for Rs990/ billionand the organized sector‘s share is about Rs230/ billion. About 60 percent of the installationprocessing capacity is through the cooperative sector.All big name of India like Mother dairy, Amul, sudha, Parag, Paras are already in thebusiness to explore their opportunity in the sector. With emergence of a new player likeReliance dairy life has bring aspect in this field. This study is to know consumer perception 7
  8. 8. about pouch milk and cup curd. This study is conducted with a view to understand the publicperception , the market dynamics that is prevailing the dairy sector and the potential ofpouched milk in this sector.The research design that was followed started with exploratory research to understand theconsumer perception, liking at hand. How they are motivated to buy a particular brand ofmilk and how they update their knowledge regarding the product. The research methodologywas developed and following the same research was extended to in-depth interview with theconsumer buying parameters. The research also involved the focus group interview of thefocus group interview of the consumer that are belongs to the different classes of society andpeople who are the potential customer of the pouched milk in coming days. A major sourceof information in this category being secondary data analysis.Research question were framed which was further divided into subcomponents and followingthe subcomponent a questionnaire is designed to conduct descriptive research. First a pre testis carried out with the questionnaires. Finally a full scale descriptive research is conducted inEast Delhi& Noida with a sample of 500 which include respondent from Nine location NEWASHOK NAGAR , MAYUR VIHAR PHASE 3 ,NOIDA SECOR 18 ,NOIDA SECOR 15 ,NOIDA SECTOR 31,NOIDA SECTOR 45 , VONOD NAGAR ,TRILOKPURI,KHICHRIPUR. 8
  11. 11. DAIRY INDUSTRYIn spite of the unprecedented rise in milk production in the last two decades in India, themodern dairy industry has not really taken –off the way it was through it would. Despitesuccesses like the operation flood and the cooperative movement and establishment ofinstitutions like the National Daily Development board (NDDB), much of the dairy sectorstill remains in the hands of small formal, unorganized players. This puts considerableconstraints on promotion of high value added dairy products, technological innovation andup gradation, and most importantly quality management.This paper is an attempt to take a look at some of the government policies over the last fewdecades and assess the impacts of such policies on the growth and development of the dairysector in the country. Starting from the ―Operation flood‖ in the 1970s, to the relicensing ofthe dairy sector in1991, an effort has been made to map the major changes in the dairy sectorto the policy changes that either fuelled or hindered such a change.The livestock sector contributes over 4 percent to the GDP and about a quarter of the GDPfrom agriculture and allied activities. This sector is a family of the arid and semi-arid region.India rank first in the world in milk production, which increased from 17 million tons (MT)in 1950 to about 109 (MT) by 2010-11. The per capita availability of milk has also increasedfrom 112 grams per day in 1968-69 to 246 grams during 2010-11. But it is still lowcompared to the world average of 265 grams per day. About 80 percent of the milk producedin the country is in the unorganized sector and the remaining 20 percent is shared equally bycooperative and private dairies. Over 1.2 laths village level dairy cooperative society, splitover 265 districts in the country, collect about 21 million liter of milk per day and marketabout 18 million liters. The efforts of the department in dairy sector are concentration onpromotion of daily actives in non-operation flood area with emphasis on building upcooperative infrastructure revitalization of sick dairy cooperative and federation and creationof infra-structure in states for production of quality milk and milk products. 11
  12. 12. Production and per capita availability of milkYear Per capita milk(grams per Production(MT) day)1990-91 176 53.92000-01 220 80.62003-04 231 88.12004-05 233 92.52005-06 241 97.12006-07 246 100.72007-08 246 1022008-09 247 103.62009-10 249 105.1 12
  13. 13. MILK INDUSTRYIn the 1940s, farmers in Gujarat had few options –they had to sales their milk either toprivate milk contractors or to single private dairy-Polson dairy. Polson‘s used to collectchilled and supply milk to Bombay milk scheme, which supplied milk in Bombay and somecities in Gujarat. Polson‘s dairy used its position to determine the quantity and quality ofmilk the farmers supplied and paid them very low prices. Traditionally in India dairy hasbeen a rural cottage industry. Semi commercial dairy with establishment of military dairyforms and cooperative milk unions though out the country towards the end of nineteenthcentury. In earlier years many households owned their own family cows or secured milkfrom a neighbor who had one. With the increase in urban population fewer household couldafford to keep a cow for private use and more ever there were other problems also like thehigh cost of milk production, problem of sanitation, restricted practices and gradually thefamily cow in the city was eliminated and city cattle were all send back to the rural area.Gradually farmers living near the cities took advantage of their proximity to the cities andbegan supplying milk to the urban population; this gave rise to fluid milk- shades we seetoday in every city of our country.Analysis of Milk IndustryTraditionally, in India dairying has been a rural cottage industry. Semi-commercial dairyingstarted with the establishment of military dairy farms and co-operative milk unionsthroughout the country towards the end of the nineteenth century.In earlier years, many households owned their own ‗family cow‘ or secured milk from aneighbor who had one. With the increase in urban population fewer households could affordto keep a cow for private use & moreover there were other problems also like the high cost ofmilk production, problems of sanitation etc. restricted the practice; and gradually the familycow in the city was eliminated and city cattle were all sent back to the rural areas. 13
  14. 14. Gradually farmers living near the cities took advantage of their proximity to the cities &began supplying milk to the urban population; this gave rise to the fluid milk-sheds we seetoday in every city of our country.Prior to the 1850s most milk was necessarily produced within a short distance of the place ofconsumption because of lack of suitable means of transportation and refrigeration.The Indian Dairy Industry has made rapid progress since Independence. A large number ofmodern milk plants and product factories have since been established. These organizeddairies have been successfully engaged in the routine commercial production of pasteurizedbottled milk and various Western and Indian dairy products. With modern knowledge of theprotection of milk during transportation, it became possible to locate dairies where land wasless expensive and crops could be grown more economically.In India, the market milk technology may be considered to have commenced in 1950, withthe functioning of the Central Dairy of Aare Milk Colony, and milk product technology in1956 with the establishment of AMUL Dairy, An and.Indian dairy sector is still mainly an unorganized sector as barely 10% of our total milkproduction undergoes organized handling.Indian Dairy Industry –Facts & Figures 14
  15. 15. Beginning in organized milk handling was made in India with the establishment of MilitaryDairy Farms.Handling of milk in Co-operative Milk Unions established all over the country on a smallscale in the early stages.Long distance refrigerated rail-transport of milk from Anand to Bombay since 1945Pasteurization and bottling of milk on a large scale for organized distribution was started atAarey (1950), Calcutta (Haringhata, 1959), Delhi (1959), Worli (1961), Madras (1963) etc.Establishment of Milk Plants under the Five-Year Plans for Dairy Development all overIndia. These were taken up with the dual object of increasing the national level of milkconsumption and ensuing better returns to the primary milk producer. Their main aim was toproduce more, better and cheaper milk.Milk Production Indias milk production increased from 21.2 million MT in 1968 to 88.1 million MT in 2003-04. India is the largest producer of Milk in the World (replacing USA) Per capita availability of milk presently is 231 grams per day, up from 112 grams per day in 1968-69. Indias 3.8 percent annual growth of milk production surpasses the 2 per cent growth in population; the net increase in availability is around 2 per cent per year.Marketing In 2004-05, average daily cooperative milk marketing stood at 155 lakh litres, registering a growth of 4.2 percent over 148.75 lakh litres in 2003-04. Dairy Cooperatives now market milk in about 200 class cities including metros and some 550 smaller towns. 15
  16. 16. During the last decade, the daily milk supply to each 1,000 urban consumers has increased from 17.5 to 52.0 litres.Innovation Bulk-vending - saving money and the environment. Milk travels as far as 2,200 kilometers to deficit areas, carried by innovative rail and road milk tankers. Ninety-five percent of dairy equipment is produced in India, saving valuable foreign exchange.Macro Impact The annual value of Indias milk production amounts to about Rs. 880 billion. Dairy cooperatives generate employment opportunities for some 12 million farm families. Dairy Farming is the single largest contributor to the economy(5% of GDP &13% of employment) Dairy industry represents a huge opportunity being the largest single FMCG Market: Urban Met size Rs 33000 Crores and organized sector Rs 11000 Cores representing a huge opportunity for conversion and growth.Key challenges before Indian Dairy Industry are as follows:• Ensuring Quality• Procurement and efficiencies in supply chain• Product differentiation and value additionMilk Production 16
  17. 17. The UpsideIncreasing awareness:As India enters an era of economic reforms, agriculture, particularly the livestock sector, ispositioned to be a major growth area. The fact that dairying could play a more constructiverole in promoting rural welfare and reducing poverty is increasingly being recognized. Forexample, milk production alone involves more than 70 million producers, each raising one ortwo cows/buffaloes. Cow dung is an important input as organic fertilizer for crop productionand is also widely used as fuel in rural areas. Cattle also serve as an insurance cover for thepoor households, being sold during times of distress.Supply matches demand:Efforts to increase milk production by dairy farmers are strongly influenced by the degree towhich demand signals are transmitted through the marketing system. Cooperatives haveplayed an important role in transmitting the message of urban market demand to them. Sincethe demand in the urban scenario is rapidly increasing so is the supply generated by thefarmers.Surplus capacity:Further, the new dairy plant capacity approved under the Milk & Milk Products Order(MMPO) has exceeded 100 million lpd. The new capacity would surpass the projected ruralmarketable surplus of milk by about 40 per cent by 2005 AD.The DownsideTechnological gaps:Several areas of the dairy industry can be strengthened by the induction of state-of-the-arttechnologies from overseas. Those who bring in new technologies or sign joint ventures with 17
  18. 18. foreign companies stand to benefit the most. To make the best out of the present situation,the following areas require immediate remedial action on the part of dairy entrepreneurs:Raw milk handling needs to be upgraded in terms of physiochemical and microbiologicalattributes of the milk collected. The use of clarification and bactofugation in raw milkprocessing can help improve quality of the milk products.Better operational efficiencies are needed to improve yields, reduce waste, minimizefat/protein losses during processing, control production costs, save energy and extend shelf-life. The adoption of Good Manufacturing Practices (GMP) and HACCP would helpmanufacture milk products conforming to international standards and thus make their exportscompetitive.Latest packaging technology can help retain nutritive value of packaged products and extendtheir shelf-life. For proper storage and transportation, cold chain needs to be strengthened. 18
  19. 19. Analyzing the product - MilkMilk- An almost complete foodMilk is not only an excellent source of Calcium, which is vital for strong bones and teeth; italso contains many other vital nutrients like:Protein: For growth and repair of body tissues.Carbohydrates: In the form of lactose.Fat: For energy.It also contains Vitamins needed for good health; Vitamin A, B1, B2, B3, B12, FOLICACID and Vitamin D are all found in significant quantities in milk.A glass of milk provides 50% of the daily intake of calcium required by teenagers.Demand & Supply Equations: 19
  20. 20. Supply:Supply of milk is affected by the seasonal influences, in summers the milk supplies dip & inwinters it soars. Therefore, dairies generally make use of the surplus milk available withthem during winters for manufacturing milk powder so that they can meet the increaseddemand during summers.Demand:Demand for milk is not very stable either, during festivals its demand increases exponentially.In 2003,for example, the demand during festivals surpassed even Mother Dairy‘s projections& its booth had to encounter a rare problem of being out of stock, a blot indeed on anotherwise impeccable distribution system of Mother Dairy. Since then, to its credit MotherDairy brought efficiency in the system & reevaluated its strategy to encounter this problem &to be fair to them they have lived to the expectations of its consumers by making milk easilyavailable.BACKGROUND TO STUDY-VCS CONCEPTIn 1945, encouraged by the nationalist leader SardarVallabbhai Patel, Tribhuvantdas Patel, afarmer and social worker in kaira district, began organizing dairy farmers into cooperatives,which could sell the sell the milk directly to the Bombay milk scheme. Patel encouraged themilk producers to form cooperatives to combat the monopoly of Polson‘s dairy. The dairyfarmers then went a step further and decided to form their own union to deal directly withfinal buyer .in 1946s ,the milk producer union ,kaira district cooperative milk producer‘sunion Ltd.(KDCNPUL) was registered with patel as its first chairman. it began with twovillage cooperatives which collected 250 liters of milk every day. In 1955, KDCMPUL wasrenamed Anand milk union limited (AMUL). 20
  21. 21. THE ANAND PATTERNThe Anand pattern had three-tier structures. At bottom of three-tier structure were VCSs.These were associated with milk unions collectively formed a state level federation. TheVCS procured milk from the members; district unions transported and processed the milkproducts, while the role of federations was that of marketing, strategic planning andinvestment. All facilities to process the milk were owned by the farmers and managed byprofessionals.FUNCTION OF VILLAGE COOPERATIVE SOCIETIES, DISTRICT UNION ANDSTATE FEDERATIONVillage cooperative societies Procure, test and pay for the milk. Provide veterinary first aid. Other support services including cattle feed, supplying fodder and fodder seeds. Conduct training on animal husbandary and dairying. Sell milk to district union.District Unions Own and operate dairy plant, chilling centers, animal feed plant etc. Arrange transport to procure milk from VCS. Organize and supervise VCS. Provide guidelines and support to VCS. Processed milk, manufacture milk based product as decided by federation. Operate cattle dairy feed plant.State federation Arrange for sale of milk and related products of the members. Maintain quality of the products. Undertake marketing and other related activities. Pricing policies and fixing the price. 21
  22. 22. Deciding on the product mix in consultation with district unions. Ensure smooth functioning of district unions and VCS.OPERATION FLOOD AND THE NATIONAL DAIRY DEVELOPMENT BOARD(NDDB),1970 TO 1996Post independence, India was a milk- stressed country with domestic demand far outstrippingthe domestic production of milk .given the nutrition and hunger problems in the country, thegovernment took upon itself the task of development of the domestic dairy industry. Thetwo-pronged objectives for the government were first to augment the supply of milk fordomestic consumption and second to increase the returns to dairy farmers by providing theinfrastructure for producing value added dairy products.As one of the biggest programs for development of dairy came the ―Operation Flood‖ in theyear 1970-71. This was a rural development program me, which received liberal grants fromthe government of India (NDDB), the world bank and the European Economic Commission(EEC). Operation flood worked to create an integrated national milk market, and establishedinstitutions to cost effectively procure, process and market the milk and milk products itworked through setting-up of small milk producers cooperatives, which procured milk fromin the village and provided with input and service.IMPACTS OF OPERATION FLOODOperation Flood has had far reaching impact on the development of modern dairyingfacilities in the country. It has not only impacted growth in production and distribution ofmilk and milk products, but also dominated the rural development scenario by providingsustainable livelihood options to millions of rural farmers. A world bank audit showed that ofthe Rs. 200 crores invested in Operation Flood (ll), the net return into the rural economy hasRs. 24000 crores per year over a period of ten years, or a total or a total of Rs. 24000 croresin all, No other major development program in the world has matched this input-output ratio. 22
  23. 23. INDUTRY STRUCTURE- LIQUID MILK AND MILK PRODUCTA total of 45.7 million tone of milk was processed into milk products in the year 2000-01,out of which the share of the organized sector (including all dairy cooperatives) was anabysmal 10%. On the other hands 38.9 million tons of liquid milk was produced in India in2000-01, out of which only 15.4 % was processed, and the rest was sold unprocessed. In boththe above categories we clearly see that the industry is dominated by small, informal,unorganized dairy units. In the absence of adequate integration and economies of scale, mostof the milk and milk products are either sold unprocessed, or processed locally into lowvalue-added products. Such products in absence of hygiene, quality and safety are unable tocommand premium prices from the consumers. Few reasons why the informal sector is ableto survive and complete in the market with organized dairy players are as follows first, theinformal milk vendors are able to work with very low levels of investments. Thus despitelow volumes ,they are able to compete with the organized players they procure milk dailyfrom the farmers, and supply within hours to the nearby consumption centers(urban areas)and thus do not have to invest heavily in chilling and pasteurizing units, unlike the case withorganized players. Second most of the small informal milk vendor have very small operatingcycles, and are able to turn their stocks daily and recover their money from the business. Insuch a scenario, they are in a position to pay higher prices to farmers then most cooperativeand are able to procure milk from the members of the cooperatives without making anysignificant investment in developing procurement base.Cooperative UnionsOver almost half a century ago, the life of a farmer in Kaira District was very much like thatof his counterpart anywhere else in India. His income was derived almost entirely from 23
  24. 24. seasonal crops. The income from selling milk was undependable. The marketing anddistribution system for the milk was controlled by private traders and middlemen. As milk isperishable, farmers were compelled to sell it for whatever they were offered. Often, they hadto sell cream and ghee at throwaway prices. In this situation, the one who gained was theprivate trader. Gradually, the realization dawned on the farmers that the exploitation by thetrader could be checked only if they market their milk themselves. In order to do that theyneeded to form some sort of an organization. This realization is what led to the establishmentof the Kaira District Cooperative Milk Producers Union Limited (popularly known as Amul)which was formally registered on December 14, 1946.Backward integration of the process led the cooperatives to advances in animal husbandryand veterinary practice. More than 900 village cooperatives have created jobs for people in their own villages and that too without disturbing the socio-agro-system and thereby the exodus from the rural areas has been arrested to a great extent. The yearly elections of the management committee and its chairman, by the members, are making the participants aware of their rights and educating them about the democratic process. Perpetuating the voluntary mix of the various ethnic and social groups twice-a-day for common causes and mutual betterment has resulted in eroding many social inequalities. The rich and the poor, the elite and the ordinary come together to cooperate for a common cause. Live exposure to various modern technologies and their application in day-to-day life has not only made them aware of these developments but also made it easier for them to adopt these very processes for their own betterment. One might wonder whether the farmer who knows almost everything about impregnating a cow or buffalo, is also equally aware of the process in the humans and works towards planning it. The income from milk has contributed to their household economy. Besides, women, who are the major participants, now have a say in the home economy. 24
  25. 25. This income is helping these people not only to liberate themselves from the stronghold ofpoverty but also to elevate their social status.The system succeeded mainly because it provides an assured market at remunerative pricesfor producers milk besides acting as a channel to market the production enhancementpackage. Whats more, it does not disturb the agro-system of the farmers. It also enables theconsumer an access to high quality milk and milk products. Contrary to the traditionalsystem, when the profit of the business was cornered by the middlemen, the system ensuredthat the profit goes to the participants for their socio-economic upliftment and common good. Produce an appropriate blend of the policy maker‘sfarmer‘s board of management and the professionals: each group appreciating its roles and limitations. Bring at the command of the rural milk producers the best of the technology and harness its fruit for betterment. Provide a support system to the milk producers without disturbing their agro- economic systems. Plough back the profits, by prudent use of men, material and machines, in the rural sector for the common good and betterment of the member producers. Even though, growing with time and on scale, it has remained with the smallest producer members. In that sense, Cooperative Movement is an example par excellence, of an intervention for rural change.Recently the Indian cooperative movement got a much needed facelift. With competitionsnapping at its heels, the sector which has been governed by arcane laws until the recent pastwill see a special provision inserted in the Companies Act, 1956. All the cooperative unionswill be re-christened cooperative companies; they will come under the purview of theregistrar of companies, instead of the registrar of cooperatives. 25
  26. 26. While they will have to adhere by the audit procedures like any corporate, they will differfrom ordinary companies in many ways. Not everyone can join a cooperative. Only users canenroll as members at a fixed membership fee. Quantum of business and not equity capitalwill see an election to the board. And there will be flexibility to raise capital from membersand outside.Dairy Cooperatives account for the major share of processed liquid milk marketed in thecountry. Milk is processed and marketed by 170 Milk Producers Cooperative Unions, whichfederate into 15 State Cooperative Milk Marketing Federations.The Dairy Boards programmes and activities seek to strengthen the functioning of DairyCooperatives, as producer-owned and controlled organizations. NDDB supports thedevelopment of dairy cooperatives by providing them financial assistance and technicalexpertise, ensuring a better future for Indias farmers.Over the years, brands created by cooperatives have become synonymous with quality andvalue. Brands like Amul (GCMMF), Vijaya (AP), Verka (Punjab), Saras (Rajasthan).Nandini (Karnataka), Milma (Kerala) and Gokul (Kolhapur) are among those that haveearned customer confidence.Some of the major Dairy Cooperative Federations include: 26
  27. 27. Andhra Pradesh Dairy Development Cooperative Federation Ltd (APDDCF) Bihar State Cooperative Milk Producers Federation Ltd (COMPFED) Gujarat Cooperative Milk Marketing Federation Ltd (GCMMF) Haryana Dairy Development Cooperative Federation Ltd. (HDDCF) Himachal Pradesh State Cooperative Milk Producers Federation Ltd (HPSCMPF) Karnataka Cooperative Milk Producers Federation Ltd (KMF) Kerala State Cooperative Milk Marketing Federation Ltd (KCMMF) Madhya Pradesh State Cooperative Dairy Federation Ltd (MPCDF) Maharashtra Rajya Sahakari Maryadit Dugdh Mahasangh (Mahasangh) Orissa State Cooperative Milk Producers Federation Ltd (OMFED) Pradeshik Cooperative Dairy Federation Ltd (UP) (PCDF) Punjab State Cooperative Milk Producers Federation Ltd (MILKFED) Rajasthan Cooperative Dairy Federation Ltd (RCDF) Tamilnadu Cooperative Milk Producers Federation Ltd (TCMPF) West Bengal Cooperative Milk Producers Federation Ltd. (WBCMPF)The Dairy Cooperative Network:  includes 170 milk unions 27
  28. 28.  operates in over 338 districts  Covers nearly 1, 08574 village level societies  is owned by nearly 12 million farmer members.Apart from making India self sufficient in milk, these dairy co-operatives have establishedour country as the largest milk-producing nation in the world!National Dairy Development Board 28
  29. 29. The National Dairy Development Board was created to promote, finance and supportproducer-owned and controlled organizations. NDDBs programmes and activities seek tostrengthen farmer cooperatives and support national policies that are favorable to the growthof such institutions. Fundamental to NDDBs efforts are cooperative principles and theAnand Pattern of Cooperation.A commitment to help rural producers help themselves has guided the Dairy Boards workfor more than 30 years. This commitment has been rewarded with achievements made bycooperative dairies in milk production, employment generation, and per capita availability ofmilk, foreign exchange savings and increased farmer incomes.The National Dairy Development Board (NDDB) has replaced exploitation withempowerment, convention with modernity, stagnation with growth and transformed dairyinginto an instrument for the development of Indian farmers.The National Dairy Development Board was created in 1964 in response to the PrimeMinister Lal Bahadur Shastris call to "transplant the spirit of Anand in many other places".He wanted the Anand model of dairy development - with institutions owned by ruralproducers, which were sensitive to their needs and responsive to their demands - replicated inother parts of the country.The Boards creation was routed in the conviction that our nations socio-economic progresslies largely on the development of rural India.Thus NDDBs mandate is to promote, finance and support producer-owned and controlledorganizations. NDDBs programmes and activities seek to strengthen farmer cooperativesand support national policies that are favourable to the growth of such institutions.NDDB believes that the Rs 7,000-crore (Rs 70-billion) milk cooperative market is gettingmuch more competitive and wants to strengthen the position of cooperatives through a multi- 29
  30. 30. pronged action plan with an outlay of Rs 800 crore (Rs 8-billion). This includes using MDFLto enter into 51:49 joint venture companies with state cooperative federations to assist themwith marketing value added products and to help them in other ways to become self-reliantenterprises. 30
  31. 31. SWOT ANALYSIS OF INDIAN DAIRY INDUSTRYSTREANGTHS Large production base Large procurement base due to establishment of numerous village dairy cooperative societies Large domestic demand Large stock of milch cattle Cheap supply of labour Easy availability of fodder, and animal feed at affordable ratesWEAKNESSES Lowest productivity of milch animals in the world Dairy sector dominated largely by informal, unorganized players Vertical integration still not very robust in case of many dairy Most dairy brands are nascent and not very popular among consumer – weak marketing for processed dairy products Risk management and insurance facilities are still not easily available. 31
  32. 32. OPPERTUNITIES Liberalization of the economy-dairy sector open for investment by private and foreign players. Abolition of the quantities restrictions on import of dairy products. Per capita consumption of milk below international average-scope. Amendment of milk and milk product order (MMPO) –no restriction on capacity installation and expansion. Amendment of cold storage act (no licenses needed for establishment refrigerated and cold chain units for dairy products).THREAT Usage preservative chemical. Increases chances of black marketing. 32
  34. 34. Milk is industrialist Mukesh Ambani‘s newest business muscle and his corporate dairy islooking for refrigerator space at mom and pop stores, in addition to vending from RelianceRetail stores.With the beginning of sale of ‗Dairy Pure‘ through general milk retailers, as opposed tomostly through Reliance Retail-owned stores now, the company expects further growth inthis business, according to a PTI report.The milk business turnover grew nearly 3-fold to over Rs 178 crore last financial year.Living up to its reputation of entering a market with a competitive edge in terms of pricing,Reliance Retail is trying to lure customers with 10 per cent extra milk in every packet thanthat of its rivals for the same price.When asked, the company spokesperson said that Reliance Retail was expanding and furtherstrengthening its milk retailing business through its ‗Dairy Pure‘ brand.Besides Reliance stores, the milk brand is also being sold ―through general trade (includingmilk retailers) in Haryana, Punjab, Andhra Pradesh, Tamil Nadu, Rajasthan, NCR (NationalCapital Region) and Himachal Pradesh,‖ the spokesperson added.On their part, rivals are welcoming a large corporate in the market saying it would benefitboth farmers and customers, but are not perturbed by the competitive pricing as they considerit too small a player as yet to eat into their pie.Amul, the country‘s largest milk retailer, believes a sizeable market presence cannot be builtovernight in milk and needs strong procurement and marketing network.―Reliance Retail‘smilk brand has not got much presence in the market as yet. But it is good for the market tohave more players and entry of a large corporate house would be beneficial for farmers aswell as customers,‖ Amul‘s Chief General Manager R S Sodhi said. 34
  35. 35. The market is mostly dominated by state cooperatives.Asked whether Amul would lower prices following the competitive offer from Reliance,Sodhi said no such plans were on the table as the company was not worried over lowerpricing by Reliance Retail, as it had no significant presence as yet.Still, Reliance Dairy Foods Ltd, the milk and other dairy products subsidiary ofpetrochemicals and refining major Reliance Industries, saw its turnover grow nearly three-times last financial — from Rs 65.77 crore in 2007-08 to Rs 178.05 crore in 2008-09.However, its loss after tax widened from Rs 3 crore in 2007-08 to Rs 4.5 per cent in the lastfinancial year. The company believes the business would grow further as it was also lookingat expanding product portfolio as also processing and packaging facilities.―We see this business further growing with the extension of our product portfolio. RelianceRetail currently has its processing and packaging facilities in Andhra Pradesh, Haryana andRajasthan and would look at expanding this over a period of time in other states,‖ thespokesperson said.The official, however, declined to comment on investments to be made for expansion as alsoits targeted market size for the dairy business.Reliance Dairy Foods‘ total assets stood at Rs 82.23 crore at the end of the last financialyear, up from about Rs 39 crore at the end of 2007-08, according to the information inReliance Industries‘ annual report. 35
  36. 36. Operational ReviewThe Company strengthened its presence in the milk retailing business by launching ‗DairyPure‘ brand that are sold through general milk retailers along with Reliance Fresh stores. TheCompany presently operates in Andhra Pradesh, Haryana, Tamil Nadu, Maharashtra, Delhi,Punjab, and Rajasthan and is confident to further grow with the extension of productportfolio. The Company has incurred a loss of Rs.415.29 Lakh for the financial year endedMarch 31, 2010.With the optimizationOf resources and further scaling up of operations, the Company is confident of posting betterresults in the future.1. a) The Company has maintained proper records showing full particulars, includingquantitative details and situation of fixed assets. b) Fixed assets have been physically verified by the management in a phased periodicalmanner as per regular program of verification, which in our opinion is reasonable, havingregard to the size of the Company and nature of its assets. As informed, no materialdiscrepancies were noticed on such physical verification. c) There are no substantial disposals of fixed assets during the year.2. In respect of its inventories:a) The inventory has been physically verified during the year by the management. In ouropinion, the frequency of verification is reasonable.b) The procedures of physical verification of inventories followed by the management arereasonable and adequate in relation to the size of the Company and the nature of its business. 36
  37. 37. c) The Company has maintained proper records of inventory. As explained to us, there wasno material discrepancies noticed on physical verification of inventory.3. The Company has neither granted nor taken any loan, secured or unsecured to/fromcompanies, firms and other parties covered in the Register maintained under Section 301 ofthe Companies Act, 1956.Therefore, the provisionsOf clause (iii) (b), (c), (d), (f), (g) of the Companies (Auditor‘s Report) Order 2003, (asamended) are not applicable to the Company.4. In our opinion and according to the information and explanations given to us, there is anadequate internal control system commensurate with the size of theCompany and the nature of its business for the purchase of inventory and fixed assets andalso for the sale of goods and services. During the course of our audit, no major weaknesshas been noticed in the internal control systemin respect of these areas.5. According to information and explanation given to us, we are of the opinion that there areno contracts or arrangements referred to in section 301 of the Companies Act. 1956 thatneeds to be entered into the register maintained under section 301. Therefore, the provisionsof clause (v) (b) of the Companies (Auditor‘s Report)Order 2003, (as amended) is not applicable to the Company.6. The Company has not accepted any deposit from thepublic.7. In our opinion, the Company has an internal audit systemCommensurate with the size and nature of its business.8. To the best of our knowledge and as explained, the Central Government has not prescribedthe maintenance of cost records under Section 209 (1) (d) of the Companies Act, 1956. 37
  38. 38. 9. In respect of statutory dues:a) According to the records of the Company, the Company is regular in depositing withappropriate authorities undisputed statutory dues includingProvident fund, investor education and protection fund, employees‘ state insurance, income-tax, sales-tax, wealth-tax, service tax, customs duty, cess and other statutory dues applicableto it. According to the information and explanations given to us, no undisputed amountspayable in respect of providentfund, investor education and protection fund, employees‘ state insurance, income-tax,wealth-tax, service tax, sales-tax, customs duty, cess and other undisputed statutory dueswere outstanding, as at March 31, 2010 for a period of more than six months from the datethey became payable.b) According to the information and explanation given to us, there are no dues of sales tax,income tax, wealth tax, service tax, custom duty, excise duty and cess which have not beendeposited on account of any dispute.10. The Company has been registered for a period of less than five years and hence we arenot required to comment on whether or not the accumulated losses at the end of the financialyear is fifty per cent or more of its net worth and whether it has incurred cash losses in suchfinancial year and in the immediately preceding financial year.  The company has not raised loans from Financial Institutions or Banks or by issue of Debentures and hence Clause 4 (xi) of the Companies (Auditor‘s Report) Order 2003, (as amended) are not applicable to the Company. 38
  40. 40. CONSUMER BEHAVIOURConsumer behaviour is the study of when, why, how, and where people do or do not buy aproduct. It blends elements from psychology, sociology, social anthropology and economics.It attempts to understand the buyer decision making process, both individually and in groups.It studies characteristics of individual consumers such as demographics and behaviouralvariables in an attempt to understand peoples wants. It also tries to assess influences on theconsumer from groups such as family, friends, reference groups, and society in general.Customer behaviour study is based on consumer buying behaviour, with the customerplaying the three distinct roles of user, payer and buyer. Research has shown that consumerbehavior is difficult to predict, even for experts in the field.[1] Relationship marketing is aninfluential asset for customer behaviour analysis as it has a keen interest in the re-discoveryof the true meaning of marketing through the re-affirmation of the importance of thecustomer or buyer. A greater importance is also placed on consumer retention, customerrelationship management, personalisation, customisation and one-to-one marketing. Socialfunctions can be categorized into social choice and welfare functions.Each method for vote counting is assumed as social function but if Arrow‘s possibilitytheorem is used for a social function, social welfare function is achieved. Somespecifications of the social functions are decisiveness, neutrality, anonymity, monotonicity,unanimity, homogeneity and weak and strong Pareto optimality. No social choice functionmeets these requirements in an ordinal scale simultaneously. The most importantcharacteristic of a social function is identification of the interactive effect of alternatives andcreating a logical relation with the ranks. Marketing provides services in order to satisfycustomers. With that in mind, the productive system is considered from its beginning at theproduction level, to the end of the cycle, the consumer. All of us are consumers. We consume things of daily use, we also consume and buythese products according to our needs, preferences and buying power. These can beconsumable goods, durable goods, speciality goods or, industrial goods. 40
  41. 41. What we buy, how we buy, where and when we buy, in how much quantity we buydepends on our perception, self concept, social and cultural background and our age andfamily cycle, our attitudes, beliefs values, motivation, personality, social class and manyother factors that are both internal and external to us. While buying, we also considerwhether to buy or not to buy and, from which source or seller to buy. In some societies thereis a lot of affluence and, these societies can afford to buy in greater quantities and at shorterintervals. In poor societies, the consumer can barely meet his barest needs.The marketers therefore tries to understand the needs of different consumers and havingunderstood his different behaviours which require an in-depth study of their internal andexternal environment, they formulate their plans for marketing.Management is the youngest of sciences and oldest of arts and consumer behaviour inmanagement is a very young discipline. Various scholars and academicians concentrated onit at a much later stage. It was during the 1950s, that marketing concept developed, and thusthe need to study the behaviour of consumers was recognised. Marketing starts with theneeds of the customer and ends with his satisfaction. When every thing revolves round thecustomer, then the study of consumer behaviour becomes a necessity. It starts with thebuying of goods. Goods can be bought individually, or in groups. Goods can be bought understress (to satisfy an immediate need), for comfort and luxury in small quantities or in bulk.For all this, exchange is required. This exchange is usually between the seller and the buyer.It can also be between consumers.Consumer behaviour can be defined as the decision-making process and physical activityinvolved in acquiring, evaluating, using and disposing of goods and services. This definitionclearly brings out that it is not just the buying of goods/services that receives attention inconsumer behaviour but, the process starts much before the goods have been acquired orbought. A process of buying starts in the minds of the consumer, which leads to the findingof alternatives between products that can be acquired with their relative advantages anddisadvantages. This leads to internal and external research. Then follows a process ofdecision-making for purchase and using the goods, and then the post purchase behaviourwhich is also very important, because it gives a clue to the marketers whether his product hasbeen a success or not. 41
  42. 42. To understand the likes and dislikes of the consumer, extensive consumer research studiesare being conducted. These researches try to find out:  What the consumer thinks of the company.s products and those of its competitors?  How can the product be improved in their opinion?  How the customers use the product?  What is the customer.s attitude towards the product and its advertising?  What is the role of the customer in his family?All these factors lead to the formation of attitudes and needs of the consumerMarketing Strategy and Consumer Behaviour(i) Marketing Analysis(a) Consumer(b) Company(c) Competition(d) Condition(ii) Marketing Segmentation(e) Identify product related needs(f) Group customers with similar need sets(g) Describe each group(h) Select target market(iii) Marketing Strategy 42
  43. 43. (i) Product(j) Price(k) Distribution(l) Communication(m) Service(iv) Consumer Decision Process(n) Problem recognition(o) Information search—internal, external(p) Alternative evaluation(q) Purchase(r) Use(s) Evaluation(v) Outcomes(t) Customer satisfaction(u) Sales(v) Product/Brand imageStages of the consumption process:Pre-purchase: problem recognition & information searchPurchase: mental evaluations & making of decisionPost-purchase: The activities that the consumer undertakes after the purchase and includes;how he uses the product, his degree of satisfaction, and actions taken after the purchase ismade. 43
  44. 44. Participants in the buying process (The D.M.U.-Decision Making Unit) The marketer needs to know which people are involved in the buying decision. People might play any of several roles in the buying decision process; Initiator: the person who first suggests or thinks of an idea of buying a particular product or service i.e. who initiates the buying decision. Influencer: a person whose views or advices carries some weight in making the final decision. Decider: is the one who ultimately makes a buying decision or any part of it, i.e. whether to buy, what to buy, where to buy. One or more people may be a decider. Buyer: the person who makes the actual purchase. User: the person who uses or consumes the product. A company needs to identify who occupies these roles because they affect product design, promotion, and other marketing strategy STEPS IN CONSUMER BUYING DECISION PROCESS: 1)Problem recognition; It is the stage when the individual recognizes a need or problem to be satisfied or solved. The need can be triggered by either an internal stimulus (hunger, thirst, or sex), or external stimulus (bread, car, or ad) 2)Information research; Of key interest to the marketer are the major information sources:· Personal source- family neighbours, acquaintances· Commercial sources- sales persons, dealers , packaging displays· Public sources- mass media, consumer-rating organizations· Experiential sources- handling, examining, or using the product 44
  45. 45. The relative amount and influence of these information sources vary with the product category and buyer‘s characteristics. 3) Evaluation of alternatives; The consumer develops a set of brand beliefs about a brand, which make up the brand image. The brand image will vary with his/her experiences as filtered by the effects of selective perception, selective distortion and selective retention. The consumer may evaluate brands on the basis of price, product design, colour, packaging, after-sales service, etc. 4) Purchase decision; Having evaluated various solutions, the buyer may develop a predisposition to make a purchase. However, two factors can intervene between the purchase intention and the purchase decision that may change the purchase intention, e.g.· The attitude of others· Unanticipated situational factors In executing a purchase intention, the consumer may take up to five purchase sub-decisions;· A brand decision (brand A)· Vendor decision (dealer 2)· Quantity decision (1 computer)· Timng decision (weekend)· Payment method decision (cash/credit) 5) Post purchase behaviour; The consumer will experience some level of satisfaction or dissatisfaction. Buyers do not follow the general decision sequence at all times. The procedure may vary depending upon;· The time available· Levels of perceived risk· The degree of involvement a buyer has with a product. Marketers should provide after sales service and support to assure customer satisfaction. 45
  46. 46. Involvement Involvement may be in terms of relevance and importance and is of two types;a) High involvement; This occurs when a consumer perceives an expected purchase which is not only of high personal relevance but also represents a high level of perceived risk. Cars, washing machines, houses and insurance policies fall in this category.b) Low involvement; This suggests little threat or risk to the consumer. Low priced items such as washing soap, cooking oil, and breakfast products are bought frequently, and past experience of the product class and the brand cues the consumer into a purchase that require little information or support. Types of consumer problem solving behaviour: Consumer decision-making varies with the type of buying decision. More complex decisions are likely to involve more buying participants and more buyer deliberations. There are three types of consumer problem-solving behaviour:1) Routine response behaviour; This occurs when consumers buy low cost, frequently purchased items. The buyers have very few decisions to make. They know a lot about the product class and the major brands available and they have fairly clear preference among the brands. In general, consumers do not give much thought, search or time to the purchase. Marketers must satisfy current consumers by maintaining sufficient quality service and value. They must also try to attract new buyers by introducing new features and using point of purchase displays and price deals.2) Limited problem solving; Buying is more complex when buyers confront an unfamiliar brand in a familiar product class (e.g. a new brand of radio or toothpaste). E.g. people thinking about buying new music equipment may be shown a new brand with a new shape and new features. They may ask questions and watch adverts to learn more about the new brand. This is described as limited problem-solving because buyers are fully aware of the product class but are not familiar with all the brands available and their features.3) Extensive problem solving; Sometimes buyers face complex buying decisions for more expensive, less frequently purchased products in a less familiar product class. For these 46
  47. 47. products buyers do not often know what brands are available and what factors to consider in choosing between brands. E.g. suppose you want to buy an expensive stereo component system, you would probably spend time visiting several shops collecting information and comparing various brands before making the final decision. TYPES OF CONSUMER BUYING BEHAVIOUR From the understanding of general decision making process, perceived risk and involvement theory, it is possible to identify the following buying behaviours 1. Complex buying behaviour; It involves three- step process;· The buyer develops beliefs about a product,· Then develops attitude,· Then makes thoughtful choice Consumers are highly involved in a purchase and are aware of significant differences among brands. Products are highly expensive, bought infrequently, risky and highly self-expressive e.g. automobiles.2) Dissonance-reducing buyer behaviour; where the consumer is highly involved in a purchase but sees little difference in brands. Purchase is expensive, infrequent and risky. If the consumer finds quality differences in the brands, he might go for the higher price. If he finds little difference, he might buy simply on price or convenience.3) Habitual buying behaviour; Is characteristic with low involvement and the absence of significant brand differences Common with low cost, frequently purchased products e.g. salt Consumers reach for the same brand out of habit but there is no strong brand loyalty.4) Variety seeking behaviour; Low involvement but significant brand differences 47
  48. 48. A lot of brand switchingMarketing communication should reinforce past decisions by stressing the positive features of the product or by providing more information to assist its use and application. Personal Determinants of Consumer Behaviour These are needs, motivation, perception, learning, beliefs, and attitudes.1. Needs and Motivation· A motive is a need that is sufficiently pressing to drive a person to act.· Needs are either physiological-(hunger, thirst, comfort), or psychological-(recognition, self-esteem, etc.).· Marketers study motivation theories for consumer analysis and marketing strategy. Three of the best known theories are those of Sigmund Freud, Abraham Maslow and Fredrick Herzberg. Freud’s theory1. Assumes that the psychological forces shaping people‘s behaviour are largely unconscious, and that a person cannot fully understand his/her own motivation.2. When a person examines specific brands, he/she will react not only to their stated capabilities, but also to other less conscious cues.3. Shape, size, weight, colour and brand can all trigger certain associations and emotions in the consumer. Motivation researchers often collect ―in-depth interviews‖ to uncover deeper motives that trigger the purchase of a product. 48
  49. 49. Maslow’s theory· In order of importance, they are physiological needs, safety needs, social needs, esteem needs and self- actualization. A person will try to satisfy their most important needs first, after which he will then try to satisfy the next higher need. The theory helps marketers to understand how various products fit into the plans, goals, and lives of consumers. Herzberg’s theory He developed a two- factor theory that distinguishes dissatisfiers (factors that cause dissatisfaction) and satisfiers (factors that cause satisfaction).Satisfiers must be actively present to motivate a purchase. The implications are that sellers must do their best to avoid dissatisfiers e.g. poor instructions manual. The manufacturers should identify the major satisfiers and motivators and supply them to buyers. Perception Perception is a process by which an individual selects, organizes and interprets stimuli into a meaningful, coherent image or picture of the world. simply said it is how an individual views a particular product. A motivated person is ready to act and how he acts is influenced by his or her perception of the situation. Two people in the same motivated state and objective situation may act quite differently because they perceive the situation differently. People can emerge with different perceptions of the same object because of three perceptual processes: selective attention, selective distortion, and selective retention. 49
  50. 50. Learning Learning can be defined as ‗a relatively permanent change in behaviour that occurs as a result of experience or reinforced practice‘. Most human behaviour is learned. Two main approaches to learning are:· Behavioural-association, reinforcement and motivation.· Cognitive-processing information in order that problems can be resolved. Learning theory teaches marketers that they can build up demand for a product by associating it with strong drives, using motivating cues, and reinforcement. Personality Theories Personality is, essentially, concerned with the inner properties of each individual, those characteristics that differentiate each of us. Freudian theory of personality; psychoanalytic theory: It assumes that the needs which motivate human behaviour are driven by primary instincts- life and death. The life instincts are considered to be predominantly sexual in nature, whereas the death instincts are believed to be manifested through self-destructive and/or aggressive behaviour. The personality of an individual is assumed to have developed in an attempt to gratify these needs, and consists of the id (pleasure seeking), super ego (acts within the rule of the society) and ego. 50
  51. 51. Trait theory: Traits are distinguishing, relatively enduring ways in which one individual differs from another. Personality is measured and quantified e.g. the degree of assertiveness, responsiveness to change or level of sociability. Marketers identify specific traits and then develop consumer profiles which enable a distinct market segment to be determined. For example, Aspirers seek status and self- esteem (materialism) and are targeted with products which act as symbols of achievement e.g. designer clothes, latest hi-fi etc. Consumers are likely to choose brands whose personalities match their own. For example; Tommy Hilfiger-‗youthfulness‘, Levi‘s- ruggedness. Brand personalities can attract consumers with the same self-concept (how somebody views himself). Beliefs and attitudes An attitude is a learned predisposition to behave in a consistently favourable or unfavourable way with respect to a given object. Through doing and learning, people acquire beliefs and attitudes. Attitudes relevant to purchase behaviour are formed as a result of direct experience with the product, word of mouth information acquired from others, or exposure to mass media advertising. A company can fit its products into existing attitudes rather than trying to changing them. Attitude change strategies include:· Changing the consumer‘s basic motivational function, i.e., making particular needs prominent.· Associating the product with an admired group or event e.g. social support events, celebrities, e.t.c. 51
  52. 52. · Resolving two ‗conflicting attitudes‘ e.g. moving from negative to positive.· Altering components of a multi –attribute product e.g. toothpaste (regular and herbal, etc.).· Changing consumer belief about competitors‘ brands. External Determinants of Consumer Behaviour: Consumers are social and cultural human beings. Their behaviour is affected by the social setting they find themselves in as well as the cultural practices of the community they live in.1) Culture: It refers to the ways of life of a people. It is a set of socially transmited beliefs, attitudes, norms and customs. Culture is learned from parents, teachers, and society in general. Culture describes the prescribed acceptable behaviours and norms of a society. Marketers has to understand the changes in cultural shifts in a society in order to capture opportunities to serve them in a better manners. Any marketer must be familiar with the culture of the people they wish to sell to.2) Social classes: It is the division of the society into groups. It is also known as social stratification. Social functions have to be performed by a society for it to survive. Stratification in the world is done on the bases of education, occupation, income or economic and political station. In some societies eight to nine strata were found but in most of the society three classes were found i.e Upper class, middle class and lower class. A social class is an open aggregate of people with a similar social ranking. It is open since people can move in and out of the group. Mobility may take the form of education, occupation, talent, marriage, etc. Within a social class, people will to a certain extent have the same patterns of behaviour, similar attitudes, values, possessions, etc. 52
  53. 53. Characteristics of social classes; People within the same social class exhibit similar behaviour. People are ranked as occupying an inferior or superior social position according to their social class. A social class is not indicated by any single variable, but is as a result of the weighed function of an individual‘s occupation, place of residence, wealth, education, values, e.t.c. The marketer has to identify the class differences due to the following reasons;· Each class will have certain products that appeal to them and others that do not appeal to them. The marketer has to concentrate their marketing effort on specific social classes.· In the same social class, there may be individual tastes that the marketer needs to take into consideration. The kind and quality of the product selected may vary from one consumer to another.· Difference in classes may also show in marketing areas the consumers frequent. Certain classes may have a preference for a given shop, club, restaurant etc.· The media habits of different classes will also differ. Some members of a class may read different newspapers and listen to different programs or watch different stations on T.V. Reference groups: Reference group is a group of people who have direct or indirect influence on the individuals behaviour. It acts as point of comparison or refence point/frame of reference for an individual‘s behaviour. Reference groups can be classified in to many Types; based on the degree of involvement we can classify into two groups i.e primary and secondary groups. 53
  54. 54. Primary groups: - these are groups that are small and very close to the consumer. The consumer has direct contact with group members and often has face-to-face communication with them. They include the family, co-workers and those one spends his leisure time with. Secondary groups: - are larger and less intimate than the primary group. The consumer contact with this group may not be as frequent as those of the primary groups. They include religious organizations, professional organizations, clubs, unions, etc. Rationale groups; - these are membership groups that a person may join. They engage in activities which interest the consumer to express his idea, be guided and influenced in the type of goods consumed. They include YMCA, YWCA, scouting movement, etc. The reference group has norms that the members abide by. These norms promote conformity within the reference group. A reference group may influence the decision to buy in two ways;· Being a member of a group, a person may buy a product or service since all those in the group have done so. A person may buy a product or service for the reason of wanting to belong to or be associated with the group.· Some products can be sold by appealing them to a reference group. The consumer will use others as a point of reference;· If he lacks specific experience in the purchase or use of a product, service or idea.· When available sources of marketing information are judged as biased or inadequate.· When the outcome of a consumer‘s decision is highly visible and therefore open to disapproval from others.· When the products are in high risk category e.g. are expensive.4) Role of Opinion leaders: These are the pace setters or trend setters. They are the people who will first venture into sampling a new product before the others. They would then give information to the others 54
  55. 55. before they commit themselves to buy the product or service. The opinion leaders or the pace setters are respected and serve as a source of advice to the rest. Characteristics of opinion leaders are;· They are more interested and better read in areas they influence.· They are more self confident and sociable.· They are slightly more innovative i.e., they take risks but cautiously so. The word of mouth becomes an important tool for the spread of information here. The opinion leaders are the first to receive advertising messages and then pass them on to the others. Marketers should identify the opinion leaders first and focus information on them so that they can then influence others.5) The Family A Family comprises of two or more persons living together connected through blood or marriage or adoption and stay together. Different family structures were observed in the socieity i.e married couples, nuclear family (parents and children) and extended family(parents+children+grandparents+uncles). Members of a family have a role in the buying process and the roles will depend on the product purchased. There are three important players in the family, they are husband, wife and children. These roles may be grouped as; Wife dominated decisions.b) Husband dominated decisions. Black box model 55
  56. 56. ENVIRONMENTAL FACTORS BUYERS BLACK BOX BUYERSMarketing Environmental Buyer RESPONSE Decision ProcessStimuli Stimuli Characteristics Problem recognition Economic Attitudes Information Product choiceProduct Technological Motivation search Brand choicePrice Political Perceptions Alternative Dealer choicePlace Cultural Personality evaluation Purchase timingPromotion Demographic Lifestyle Purchase Purchase amount Natural Knowledge decision Post-purchase behaviourThe black box model shows the interaction of stimuli, consumer characteristics, decisionprocess and consumer responses. It can be distinguished between interpersonal stimuli(between people) or intrapersonal stimuli (within people).[3] The black box model is relatedto the black box theory of behaviourism, where the focus is not set on the processes inside aconsumer, but the relation between the stimuli and the response of the consumer. Themarketing stimuli are planned and processed by the companies, whereas the environmentalstimulus are given by social factors, based on the economical, political and culturalcircumstances of a society. The buyers black box contains the buyer characteristics and thedecision process, which determines the buyers response.The black box model considers the buyers response as a result of a conscious, rationaldecision process, in which it is assumed that the buyer has recognized the problem. However,in reality many decisions are not made in awareness of a determined problem by theconsumer. 56
  57. 57. Information searchOnce the consumer has recognised a problem, they search for information on products andservices that can solve that problem. Belch and Belch (2007) explain that consumersundertake both an internal (memory) and an external search.Sources of information include: Personal sources Commercial sources Public sources Personal experienceThe relevant internal psychological process that is associated with information search isperception. Perception is defined as "the process by which an individual receives, selects,organises, and interprets information to create a meaningful picture of the world".Consumers tendency to search for information on goods and services makes it possible forresearchers to forecast the purchasing plans of consumers using brief descriptions of theproducts of interest.The selective perception processStage Description Selective exposure consumers select which promotional messages they will expose themselves to. Selective attention consumers select which promotional messages they will pay attention to. Selective comprehension consumer interpret messages in line with their beliefs, attitudes, motives and experiences. Selective retention consumers remember messages that are more meaningful or important to them. 57
  58. 58. The implications of this process help develop an effective promotional strategy, and selectwhich sources of information are more effective for the brand.Information evaluationAt this time the consumer compares the brands and products that are in their evoked set.How can the marketing organization increase the likelihood that their brand is part of theconsumers evoked set? Consumers evaluate alternatives in terms of the functional andpsychological benefits that they offer. The marketing organization needs to understand whatbenefits consumers are seeking and therefore which attributes are most important in terms ofmaking a decision. It also needs to check other brands of the customer‘s consideration set toprepare the right plan for its own brand.Purchase decisionOnce the alternatives have been evaluated, the consumer is ready to make a purchasedecision. Sometimes purchase intention does not result in an actual purchase. The marketingorganization must facilitate the consumer to act on their purchase intention. The organizationcan use a variety of techniques to achieve this. The provision of credit or payment terms mayencourage purchase, or a sales promotion such as the opportunity to receive a premium orenter a competition may provide an incentive to buy now. The relevant internalpsychological process that is associated with purchase decision is integration. Once theintegration is achieved, the organization can influence the purchase decisions much moreeasily.There are 5 stages of a consumer buying process they are: The problem recognition stage,meaning the identification of something a consumer needs. The search for information,which means you search your knowledge bases or external knowledge sources forinformation on the product. The possibility of alternative options, meaning whether there isanother better or cheaper product available. The choice to purchase the product and thenfinally the actual purchase of the product. This shows the complete process that a consumerwill most likely, whether recognisably or not, go through when they go to buy a product. 58
  59. 59. Postpurchase evaluationThe EKB model was further developed by Rice (1993) which suggested there should be afeedback loop, Foxall (2005) further suggests the importance of the post purchase evaluationand that it is key because of its influences on future purchase patterns.Other influencesConsumer behaviour is influenced by internal conditions such as demographics,psychographics (lifestyle), personality, motivation, knowledge, attitudes, beliefs, andfeelings. Psychological factors include an individuals motivation, perception, attitude andbelief, while personal factors include income level, personality, age, occupation and lifestyle.Behaviour can also be affected by external influences, such as culture, sub-culture, locality,royalty, ethnicity, family, social class, past experience reference groups, lifestyle, market mixfactorsWhat is Brand Switching?Sometimes known as brand jumping, brand switching is the process of choosing to switchfrom routine use of one product or brand to steady usage of a different but similar product.Much of the advertising process is aimed at encouraging brand switching among consumers,thus helping to grow market share for a given brand or set of brands.Convincing consumers to switch brands is sometimes a difficult task. It is not unusual forcustomers to build up a great deal of brand loyalty due to such factors as quality, price, andavailability. To encourage switching brands, advertisers will often target these three areas aspart of the strategy of encouraging brand switching.Price is often an important factor to consumers who are tight budgets. For this reason,advertisers will often use a price comparison model to entice long time users of one brand totry a new one. The idea is to convince the end user that it is possible to purchase the sameamount of product while spending less money. Ideally, this means that the consumer can use 59
  60. 60. the savings for other purchases, possibly even a luxury item of some sort. The idea of morediscretionary resources in the monthly budget can be an effective in the encouragement ofjumping brands.However, price is not always enough to encourage brand switching. When this is the case,comparing the quality of one brand to another is a common approach. With this model, themotivation is that the new Brand B will work just as well as the more established Brand A.When coupled with a cost savings, the comparison of quality can often sway long timeconsumers at least long enough to give the newer product a try.There are consumers who are less concerned with cost. For these users, the approach is topresent the new brand as being of superior quality to the established brand. Essentially, thismeans demonstrating that the new brand can do everything the older brand can do, plus alittle more. For example, a product that can be used to dust wood, glass, and plastic surfacesmay be more attractive than a product that is formulated for glass only. The implication isthat the one product can take the place of three products, and may motivate brand switching.The Interaction Effect of Preference and Availability on Brand Switching and MarketShareObserved purchase behavior is the result of the combined effect of preference andavailability. A multibrand choice model of a frequently purchased consumer good isdeveloped. The model allows for the heterogeneity of the population with respect to brandpreference. It also considers that all brands are not identically distributed and are thus notequally available to the potential buyers of the product class. The model uses the brandswitching matrix in order to parcel out the effect of preference and availability. It iscompared with the Hendry System which also uses the brand switching matrix for thepurpose of measuring brand substitution or competition. 60
  61. 61. The Hendry System being a special case of the model presented in this paper, the likelihoodratio test is employed to test the more general model against Hendry. The estimation andtesting procedure uses cooking oil data from 1,961 households who remained in the SecodipConsumer Panel, France, for the entire 1971–1972 period. The variable of availability isfound to account for an additional significant portion of the variance of the switching flows.The model should prove to be a useful tool to interpret correctly the popular quantitativesummary of multibrand markets, namely the switching matrix. More efficient use of paneldata by marketing decision makers should result. 61
  63. 63. OBJECTIVE OF RESEARCH1. The main objective of this project is to probe the reasons for less market share of RelianceDairy and to find out the measures that can be adopted to increase the sales2. To study the distribution channel in the retail chain of Reliance Dairy3. To identify the issues related to Reliance Dairy retailers and distributors4. To get the retailers feedback from specific regions5. To add up new retailers in the area6. To study Reliance Dairy positioning in the mind of the consumers vis-à-vis competitors7. To find out the factors that affect consumer‘s 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 areaPROBLEMEvaluate the consumer behavior about the packed milk and factor effection the switch offbrand at the retail level. RESEARCH PROBLEM To evaluate the factor affecting the buying pattern of the consumer. The consumer thinking about the dairy products of reliance. What are the basic criteria on which consumer judge the product. Does advertisement affect the consumer buying pattern. 63
  64. 64. Which product does retailer want to keep in their store? What are the criteria on which the retailer keep product in their store. RESEARCH QUESTION Q-1: What are the factor affect the consumer buying pattern? Q-2: What quality of milk does consumer want? Q-3: Awareness of the dairy product in the allotted area. Q-4: consumer perception about the product. Q-5: Does advertisement affect the consumer buying pattern. Q-6: Availability of dairy product to the consumer. Does it is easily available to the consumer. Q-7: What are the expectations of a consumer from packed milk?RESEARCH HYPOTHESIS RH 1: Consumer are very much concern with the value for money so expectation are very high with the branded packed milk. RH 2: Common perception about the packed milk that company use chemical in milk to increase the longitivity of the milk. RH 3: People are very loyal towards a product. If a person is using a particular brand of milk then that person only want to take that product and do not want to try any other product no matter the new product is of better quality. 64
  65. 65. RH 4: Retailer wants more margin of profit. They say that mother dairy cost less than reliance pure then why will they sell reliance product. RH 5: Awareness of the product is very less so the consumer and even few retailer are completely unknown to the product. RH 6: The distribution is also not up to the mark retailer says that the milk does not reach on time there is no fixed time for the distributor of product. RH 7:consumer say that the taste of brand which they are using is good so they don‘t want to switch to any other brand. EXLORATORY RESEACH The objective of exploratory research is to explore or search through a problem or situation to provide insights and understanding. Exploratory research can be used in any of the following purposes:  Formulate a problem or define a problem more precisely.  Identify alternative course of action.  Develop hypotheses.  Isolate key variable and relationships for further examination.  Gain insight for developing an approach to the problem.  Establish priorities for further research.SECONDARY DATA ANALYSIS 65
  66. 66. There are some sauces from where data collected. These are given below:-http://www.indiadairy.comhttp://www.amul.comGROUP INTERVIEWA focus group interview is an interview conducted by a trained ia nonstructural and naturalmanner with a small group of respondents. the moderator led the discussion. The mainpurpose of people from the appropriate target market talk about issue of interest to theresearcher. The value of the technique is in the unexpected finding often obtained from a free–flowing group discussionDESCRIPTIVE RESEARCH (CONCLUSIVE RESEARCH)The major objective of descriptive research is to describe something usually marketcharacteristic. Descriptive research conducted for the following reason:- 1. To describe the characteristics of relevant group such as consumer, salesperson organization or market area. 2. To estimate market percentage of units in as pacific population exhibiting certain behavior 3. To determine the consumer thinking of the product characteristic. 4. To determine the degree to which marketing variable are associated. 66
  68. 68. 68
  69. 69. INTROUCTION The objective of exploratory research is to explore or search through a problem or situation to provide insights and understanding. Exploratory research can be used in any of the following purposes:  Formulate a problem or define a problem more precisely.  Identify alternative course of action.  Develop hypotheses.  Isolate key variable and relationships for further examination.  Gain insight for developing an approach to the problem.  Establish priorities for further research.METHODOLOGYThere are generally four basic methods for exploratory research.Qualitative research: It often used for generating hypotheses and identifying variables thatshould be included in the research.Survey of expert: In this method a formal or informal interview is done with expert in thecorresponding field to get an expertise of overall subject matter.Pilot survey: This is an unstructured or casual survey or casually data is collected in whichmost questions are asked open ended. 69