The document discusses developing a competitive strategy for Sudha milk produced by DRMU, Baruni. It begins with introducing the Indian dairy industry and COMFED. It then analyzes Sudha milk's market share and competitors. Key findings show Sudha faces challenges from loose milk due to price, delivery and quality perception. The recommended strategy has three parts - an offensive frontal attack on loose milk's price and delivery advantages, a defensive positioning against quality perceptions, and an offensive attack on organized competitors' distribution and communication. Specific tactics proposed include reducing price gaps, offering credit, advertising and improving availability.
Develop a Competitive Strategy for Sudha Milk in Begusarai
1. TO DEVELOP A COMPETITIVE
STRATEGY OF SUDHA MILK
FOR
DRMU, BARUNI
(A UNIT OF COMFED)
2. INTRODUCTION
INDIAN DAIRY INDUSTRY
India is world’s largest milk producing nation.
It contributes about 15 % to the total milk
production of the world.
Indian dairy industry stands at a mammoth size of
US$ 70 billion.
Gross output of 131.45 million tons of milk in
2014. (Growing 5 % per annum)
In India, dairy industry is regulated by National
Dairy development board (NDDB)
More than 10 million dairy farmers belong to
96,000 local dairy cooperatives, who sell their
products to one of 170 milk producers’ cooperative
unions who in turn are supported by 15 state
cooperative milk marketing federations.
3. INTRODUCTION
BIHAR STATE MILK COOPRATIVE FEDRATION (COMFED)
The Bihar State Milk Co-operative
Federation Ltd is a dairy cooperative
established in 1983 is an enterprise of the
government of Bihar. It markets its products
under the label "Sudha".
There are 11 units of COMFED those are
present in different parts of Bihar &
Jharkhand recently COMFED launched its
products in UP and Delhi.
Approximately 8.35 lakh Farmers are
presently members of COMFED through
15944 village dairy cooperatives.
The annual turnover of COMFED is more
than 1500 crore per annum.
4. Deshratna Rajendra prasad Milk Union (DRMU), Baruni
Deshratna Dr. Rajendra Prasad Dugdh
Utpadak Sahkari Sangh Limited (DRMU),
Baruni is the largest milk union in the eastern
part of India.
Its handling capacity of 5.0 lacks liters per
day.
Total milk procurement is more than 35
TLPD.
It is situated in Baruni, Begusarai.
Its area of operation is in 7 districts of Bihar.
That is Begusarai, lakhisarai, Khagaria,
saharsa, supaul, madhepura and some part
of patna district.
There are more than 1, 37,300 farmers are
INTRODUCTION
6. RESEARCH METHODOLOGY
• Research Problem
The main problem that organization is facing is, it is not
able to capitalize on the huge market potential of Milk
Market.
• Research objective
The main objectives of my project are following
Identify competitors of Sudha milk and their market
position
Identify the reasons that give an edge to its competitors
and also ranked it on the basis of importance
Develop a competitive strategy of Sudha milk
7. RESEARCH METHODOLOGY
Research design
Sampling
Respondents
Customers who regularly purchase loose milk
Customers who regularly purchase any brand of packaged milk
other than Sudha
Sample Size
100 (50 are loose milk purchaser and 50 are the other brand’s milk
purchaser)
Sampling Region
Begusarai
Sampling Method
Simple random Sampling
Data collection
Desk research
Face to face interview
Self completion questionnaire
8. DATA ANALYSIS AND FINDINGS
For Unorganized
sector
1.Less Price
2.High quality
3.Credit facility
4.Use of chemical in Sudha
milk
5.Home delivery facility
6.Relationship with
milkmen
7.Constant supply in festive
season
9. DATA ANALYSIS AND FINDINGS
For Unorganized sector
The above table of factor analysis output shows that only two factors are
able to explain 82% of variance these output consider only two factors
on the basis of the eigenvalue (>1) which is the absolute value of
variance. It means that we have to club all the factors into two major
11. DATA ANALYSIS AND FINDINGS
For Unorganized sector
‘Constant supply in festive season’ and ‘Relationship
with milkmen’ have not correlated with any of the two major
factor, so we can eliminate these two factors from further
discussion.
Baruni dairy taking several measures such as pre festival
dealer meeting, stock keeping before one to two months.
So now, less supply of milk during the festive season is
not happening. Similarly, in the case of relationship with
milkmen it looks like a good factor, but almost all respondents
agree that their relationship with Milkmen is professional.
‘Less Price’, ‘Credit facility’, and ‘Home delivery facility’,
these three factors are interrelated to each other so we must
have to club these three factors together and give it a name.
So I clubbed these factors in a single group and named it
“Price & Delivery”.
‘High quality’ and ‘Use of chemical in Sudha milk’ these
two factors are interrelated to each other. So we must have
to club these two factors together and give it a name. So I
clubbed these factors in a single group and named it
“Product Quality”.
12. DATA ANALYSIS AND FINDINGS
For Organized sector
1.Stock out of Sudha
2.Advertisement
3.Relationship with
retailer
4.Positive Word of mouth
5.Easy Availability
6.High Quality
7.Less Price
13. DATA ANALYSIS AND FINDINGS
For Organized sector
The above table of factor analysis output shows that only two factors are able to
explain 82% of the variance. These output consider only two factors on the basis of
the eigenvalue (>1) which is the absolute value of variance. It means that we have
to club all the factors into two major factors.
15. DATA ANALYSIS AND FINDINGS
For Organized sector
‘Less Price’ and ‘High Quality’ have not correlated with any of the two
major factor, so we can eliminate these two factors from further
discussion.
Because quality of Sudha milk is better or equal than other brands
packaged milk and as much as price is concerned, then only Sudha is
doing cost based pricing and all the other brands follow competitor
based pricing so they follow price of market leader in organized
sector that is Sudha so the price of all the brand’s of milk is almost
equal.
‘Stock out of Sudha’, ‘Availability of other brands’ milk’, and
‘relationship with retailers’, these three factors are interrelated to
each other so we must have to club these three factors together and
1give it a name. So I clubbed these factors in a single group and
named it “Distribution”.
‘Advertisement’ and ‘Positive word of mouth’ these two factors are
interrelated to each other. So we must have to club these two factors
together and give it a name. So I clubbed these factors in a single
group and named it “Communication”.
16. Division of milk market of Begusarai
Market Leader
Market Challenger
Market follower
Market nichers
COMPETITIVE STRATEGY OF SUDHA MILK FOR DRMU, BARUNI
Sudha milk (Market overall: 21%), (Market organized: 80%)
Unorganized sector (Loose milk) (Market share: 77%)
Amrit, Raj, and other milk (Market overall: 2%),(Market organized: 20%)
Amul (Market overall: negligible) Present only in milk product segment
Source : Nilsen survey 2012 organized by DRMU with the help of COMFED
17. Strategy-1: Attack on market leader
Market leader: Unorganized sector
Type of attack : Frontal attack
Front of attack: Price & Delivery
COMPETITIVE STRATEGY OF SUDHA MILK FOR DRMU, BARUNI
18. RECOMMENDATION
PRICE & DELIVERY
Price
There is a large difference between the price of Sudha milk and loose
milk. The price of full cream milk of Sudha is 40Rs/liter and of price of
loose milk is 34-35Rs/liter. But there is a justifiable reason behind this
price gap that is processing charge.
Since Sudha follows cost based pricing so there is only one way
of reducing prices that is reducing costs. For this, they can arrange
training & testing of its workforce and also installing superior
quality machines within plant.
If Baruni dairy can reduce the price gap between loose milk and
Sudha milk from 6-7 rupees to 3-4 rupees by reducing cost, then this
3-4 rupees price gap has to be projected as quality leadership price
means a special price for superior quality instead of trying to give
justifications of processing charges to customers for price gap.
COMPETITIVE STRATEGY OF SUDHA MILK FOR DRMU, BARUNI
19. Credit facility
Generally people pay the milkmen once in a month, but in
case of purchase of Sudha milk regularly they have to pay
cash on a daily basis, it's a difficult task for salary earners
due to this many people prefer to buy loose milk. So there
require some efforts in this regard. I recommend
Since Dairy collect money from dealer on the daily basis so
dealer also collect it from retailers on the daily basis and due
to this region retailers are also collecting money from
customers on daily basis but if dairy give credit to dealer then
retailers will be also in the position of giving credit to
customers. So Baruni dairy has to give at least 15 days of
credit to its dealers.
Since giving credit facility to customers is fully depends upon
retailers, so Baruni dairy has to encourage retailers to
provide credit facilities to their regular customers. For
this they can give monetary incentive to retailers.
PRICE & DELIVERY
COMPETITIVE STRATEGY OF SUDHA MILK FOR DRMU, BARUNI
20. Home delivery
‘Home delivery of milk’ however, not a major concern
for customers, but has a significant role in the
purchase decision of milk because in today’s busy
schedule, no one has much amount of free time to
go to shop daily for milk.
DRMU Baruni has to give full authority to its retailers
for charging home delivery fess they can print it on
the milk packets.
It has to give incentive to those retailers who are
active in home delivery.
In its advertisement, there must be the information
that ‘home delivery facility is also available on sudha
outlets’.
PRICE & DELIVERY
COMPETITIVE STRATEGY OF SUDHA MILK FOR DRMU, BARUNI
21. Strategy-1I: Defense from market leader
Market leader: Unorganized sector
Type of defense : Position defense
Front of defense: Product Quality
COMPETITIVE STRATEGY OF SUDHA MILK FOR DRMU, BARUNI
22. Quality
There is a notion in the mind of customers that the loose
milk is pure and packaged milk has chemicals, and
adulterated. However, in reality, the condition is completely
different the FAT and SNF in Sudha milk is so high than
loose milk, it is hygienic and healthier than loose milk, the
quality of Sudha milk is better than loose milk. So I
recommended to defense on this issue.
Since the quality of Sudha milk is better than loose milk, so
first needed to continue this by constant supervision of
production and milk procurement process, quality check,
customers complain about quality taking seriously and
other means.
There is greater need of breaking the notion of customer
about loose milk, so there has to be arrangement of home
fat testing campaign in an extensive manner and frequently,
where loose milk customers can test their milk and know
the FAT, SNF and other adulteration in their milk and
compare it with Sudha milk.
PRODUCT QUALITY
COMPETITIVE STRATEGY OF SUDHA MILK FOR DRMU, BARUNI
23. Use of Chemicals in Sudha milk
It is again a notion in the mind of customers that packaged
milk contains harmful chemicals for longer product life,
but only milk powder is mixed in the milk, that is not harmful
for health even good for health.
Advertisement of Sudha milk has to be designed in a way
that clarifies the customer’s doubt about the use of
chemicals.
For eatable items doctors are opinion leaders so the
doctor’s interview regarding this milk has to be published
along with the advertisement.
Regular Plant visit of housewife and school children has to
be organized so they see the production process and their
review must be published in newspapers.
Awareness camps for clarifying all the quality related issue
has to be organized at regular interval.
PRODUCT QUALITY
COMPETITIVE STRATEGY OF SUDHA MILK FOR DRMU, BARUNI
24. Strategy-III: Attack on market follower
Market follower: Organized sector
Type of attack : Frontal attack
Front of attack: Distribution & Communication
COMPETITIVE STRATEGY OF SUDHA MILK FOR DRMU, BARUNI
25. Availability
DISTRIBUTION
To encourage and give incentive to retailers to make new retailers in
the different area.
Easing and expediting the process of granting retailer ship.
Launching e- retailer ship granting facility.
To focus more on general retail outlet rather than exclusive Sudha
Shop because general retail outlet has the tendency of cross selling
and also less expensive and more profitable.
COMPETITIVE STRATEGY OF SUDHA MILK FOR DRMU, BARUNI
26. STOCK OUT OF SUDHA
The main causes of stock out are
More demand and less supply
Fluctuation of demand
Lack of cooling facility
My recommendations for reducing stock out situations are
Increasing supply in the market by increasing production.
If curdling or spoilage of milk happens, due to extra stock
demanded but not got sold, then Dairy has to give good
compensation to retailers so they are not de-motivated to demand
extra stock.
Many of retailers do not demands extra stock because they have
Refrigerators provided by Dairy but due to less power supply,
refrigerators are not capable of preventing milk from curdling. So
Baruni dairy has to provide at least one ice container box to each
retailer.
DISTRIBUTION
COMPETITIVE STRATEGY OF SUDHA MILK FOR DRMU, BARUNI
27. Relationship with retailers
The customer base of Amrit, Raj and other milk is
very small so they can personally care of
customers but in opposite customer base of
Sudha is huge. So I recommend following
measures.
Distribution of Carry Bags, T-Shirts, Caps, Gifts,
(Calendar, Pen, Dairy), Key-Ring etc. at the
regular interval.
COMFED has to issue a Toll free number for
registering complaints about bad behavior of any
retailer and also must have to take action on that
complaint.
DISTRIBUTION
COMPETITIVE STRATEGY OF SUDHA MILK FOR DRMU, BARUNI
28. Advertising (Mass communication)
Since our competitors are not withstanding with us on the
front of price and quality so they try to lure customers by
advertisement. So we also have to serious on this issue. I
recommend following measures.
Generally COMFED is focused on Newspaper, billboards,
hording and banner medium of advertisement so first it has
to continue these efforts more extensively.
It has to focus on female magazine because generally, in
family ladies are the purchase decision maker of milk.
It has to choose popular family TV channels for
advertisement.
Its aids has to be informational in the terms of quality and
clarify customers doubt such as use of chemical and other
quality related issues in its advertisement.
COMMUNICATION
COMPETITIVE STRATEGY OF SUDHA MILK FOR DRMU, BARUNI
29. Word of mouth (Personal communication)
Since the customer base of competitors is very small, so it is easy to hear
and solve the complaint of customers but the customer base of Sudha is very
large so it required some more effort in this regard. So I recommend following
measures.
Baruni diary has to encourage and aware customers by various media such
as newspapers, billboards and hoardings to register their complaint with any of
the following means
Customer satisfaction survey form conducted by academic trainees
During Field visits by supervisors
To Retailers
Toll- Free phone number of COMFED
Customers are informed that they can complain any of the issues regarding
Quality
Supply
Retailer behavior
COMMUNICATION
COMPETITIVE STRATEGY OF SUDHA MILK FOR DRMU, BARUNI
30. LIMITATION
I suggest competitive strategy for Deshratna Rajendra
Prasad Milk Union (DRMU), Baruni that has 7
districts of operation, but my survey has conducted
in only one of its, Begusarai District. So my project
is based on the assumption that my sample collected
from Begusarai is representative of all the seven
districts.
Since our population is very large, so I want to collect
a huge number of samples, but due to very limited
time of two months I can collect only 100 samples.
Marketing officials in my organization are very busy
in their work so I can meet them only once or twice
in a week.
Since my project required support of officials and
retailers of competitors’ of Sudha but they are
skeptical of my survey and research because they
felt that this survey is designed to know our loop
whole so Sudha can increase their sales. So they are
not willing to support me.