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Subhojit
1. Summer Internship Project
Report
Project Title: Consumer Behavior& factor
affecting 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
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2. CERTIFICATE
This is to certify that Mr. Subhojit Dasgupta, has completed his summer internship at
Reliance Food & Dairy Ltd., and has submitted this project report entitled Consumer
behavior & factor affecting switch-off brand at retail level and a study of consumer behavior
towards partial fulfillment of the requirements for the award of the Post Graduate Diploma in
Business Management
This Report is the result of her own work and to the best of my knowledge no part of it has
earlier comprised any other report, monograph, dissertation or book. This project was carried
out under my overall supervision.
Date:
Place:
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Internal Faculty Guide
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3. DECLARATION FORM
I hereby declare that the project work entitled
….………………………………………………… Submitted by me for the Summer
Internship during the post Graduate Diploma in Management program to Shri Ram Murti
Smarak International Business School is my own original work and has not been submitted
earlier to SRMS IBS or to any other institution for the requirement for any course of study. I
also declare that no chapter of this manuscript in whole or in part is lifted and incorporated in
this report from any earlier /other work done by me or others.
Place:
Date: Sign of student
Name of Student: ………………………………………………………………………………
Address: …………………………………………………………………………
……………………………………………………………………………
……………………………………………………………………………
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4. ACKNOWLEDGEMENTS
At the very outset, we would like to express our heartfelt gratitude to ―Reliance Dairy Foods
Ltd‖ for allowing me to do a project on consumer perception. I felt this project interesting
and challenging one.
Our thanks are due to Mr. A Abraham who was very kind in explaining
how to use the challenges that lay ahead us.
We feel indebted to Mr. N Mundepi for explaining to us the intricacies and peculiarities of
milk business which came handy on various occasions and allowed us to retain our focus and
finish 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 and
valuable support throughout the project term. It was a great learning experience to work
under their guidelines.
We are extremely thankful to my faculty guide Dr. Nidhi.S.Bisht at SRMS IBS for his
invaluable guidance and suggestion during our training.
In the end we would like to say that it was a great experience working on this project.
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5. TABLE OF CONTENTS
CHAPTER:-
1. EXECUTIVE SUMMARY
2. INDUSTRY PROFILE
3. COMPANY PROFILE
4. INTRODUCTION
5. RESEARCH METHODOLOGY
6. DATA ANALYSIS
7. SWAT ANALYSIS
8. FINDINGS
9. RECOMMENDATIONS
10. LEARNING
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7. EXECUTIVE SUMMARY
The project was started on 7th of May after knowing all the relevant information about
the 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 to
me Identification of their problem areas and helping them in order to increase sales and
promotion of brand. For this I used the method of personal interviews and questionnaires. At
the same time, they were being made aware of the incremental scheme of Reliance dairy life
for the distributors. Along with the distributors a study of retailers was conducted to better
understand the grievances and identify the gaps. For this I visited around 450 outlets in the
area, i.e., East Delhi & Noida and spoke to them. I was also supposed to find out new retail
outlets and convince them to sell Reliance dairy milk by showing them the opportunity of
getting 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 touched
the 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 103,281
dairy cooperatives. Their collection of milk was estimated at 84.6 million liters and their
earning was in region of Rs 50 billion.
Nearly 46 percent of total milk production. It means that 42.5 million tonesare consumed as
liquid milk. 47 percent is converted into traditional product like ghee, paneer, curd, cottage
butter, Rabri ,Icecream , Lassi etc. Only 7 percent of the milk is used in the production of
the western product like milk powder, processed butter. The unorganized sector accounts for
more than 50 percent of all milk and dairy products. Out of total production of milk and dairy
product worth Rs1600/ billion in 2003-04 and tradition dairy accounted for Rs990/ billion
and the organized sector‘s share is about Rs230/ billion. About 60 percent of the installation
processing capacity is through the cooperative sector.
All big name of India like Mother dairy, Amul, sudha, Parag, Paras are already in the
business to explore their opportunity in the sector. With emergence of a new player like
Reliance dairy life has bring aspect in this field. This study is to know consumer perception
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8. about pouch milk and cup curd. This study is conducted with a view to understand the public
perception , the market dynamics that is prevailing the dairy sector and the potential of
pouched milk in this sector.
The research design that was followed started with exploratory research to understand the
consumer perception, liking at hand. How they are motivated to buy a particular brand of
milk and how they update their knowledge regarding the product. The research methodology
was developed and following the same research was extended to in-depth interview with the
consumer buying parameters. The research also involved the focus group interview of the
focus group interview of the consumer that are belongs to the different classes of society and
people who are the potential customer of the pouched milk in coming days. A major source
of information in this category being secondary data analysis.
Research question were framed which was further divided into subcomponents and following
the subcomponent a questionnaire is designed to conduct descriptive research. First a pre test
is carried out with the questionnaires. Finally a full scale descriptive research is conducted in
East Delhi& Noida with a sample of 500 which include respondent from Nine location NEW
ASHOK NAGAR , MAYUR VIHAR PHASE 3 ,NOIDA SECOR 18 ,NOIDA SECOR 15 ,
NOIDA SECTOR 31,NOIDA SECTOR 45 , VONOD NAGAR ,
TRILOKPURI,KHICHRIPUR.
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9. STRUCTURE OF THE REPORT
PROBLEM DEFINITION MANAGEMENT DECISION
PROBLEM
RESEARCH ANALYSIS
EXPLORATORY RESEARCH SURVEY DESCRIPTIVE RESEARCH
OF EXPERT SECONDRY DATA CONSUMER SURVEY MARKET
ANALYSIS STUDIES ADVERTISEMENT
DATA COLLECTION FROM
SAMPLING DESIGN
PRIMARY DATA SOURCE
PILOT TESTING
DATA ANALYSIS AND INTERPRETATION
RESEARCH REPORTING
MANAGEMENT DECISION 9
11. DAIRY INDUSTRY
In spite of the unprecedented rise in milk production in the last two decades in India, the
modern dairy industry has not really taken –off the way it was through it would. Despite
successes like the operation flood and the cooperative movement and establishment of
institutions like the National Daily Development board (NDDB), much of the dairy sector
still remains in the hands of small formal, unorganized players. This puts considerable
constraints on promotion of high value added dairy products, technological innovation and
up gradation, and most importantly quality management.
This paper is an attempt to take a look at some of the government policies over the last few
decades and assess the impacts of such policies on the growth and development of the dairy
sector in the country. Starting from the ―Operation flood‖ in the 1970s, to the relicensing of
the dairy sector in1991, an effort has been made to map the major changes in the dairy sector
to 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 GDP
from 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 increased
from 112 grams per day in 1968-69 to 246 grams during 2010-11. But it is still low
compared to the world average of 265 grams per day. About 80 percent of the milk produced
in the country is in the unorganized sector and the remaining 20 percent is shared equally by
cooperative and private dairies. Over 1.2 laths village level dairy cooperative society, split
over 265 districts in the country, collect about 21 million liter of milk per day and market
about 18 million liters. The efforts of the department in dairy sector are concentration on
promotion of daily actives in non-operation flood area with emphasis on building up
cooperative infrastructure revitalization of sick dairy cooperative and federation and creation
of infra-structure in states for production of quality milk and milk products.
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12. Production and per capita availability of milk
Year Per capita milk(grams per Production(MT)
day)
1990-91 176 53.9
2000-01 220 80.6
2003-04 231 88.1
2004-05 233 92.5
2005-06 241 97.1
2006-07 246 100.7
2007-08 246 102
2008-09 247 103.6
2009-10 249 105.1
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13. MILK INDUSTRY
In the 1940s, farmers in Gujarat had few options –they had to sales their milk either to
private milk contractors or to single private dairy-Polson dairy. Polson‘s used to collect
chilled and supply milk to Bombay milk scheme, which supplied milk in Bombay and some
cities in Gujarat. Polson‘s dairy used its position to determine the quantity and quality of
milk the farmers supplied and paid them very low prices. Traditionally in India dairy has
been a rural cottage industry. Semi commercial dairy with establishment of military dairy
forms and cooperative milk unions though out the country towards the end of nineteenth
century. In earlier years many households owned their own family cows or secured milk
from a neighbor who had one. With the increase in urban population fewer household could
afford to keep a cow for private use and more ever there were other problems also like the
high cost of milk production, problem of sanitation, restricted practices and gradually the
family 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 and
began supplying milk to the urban population; this gave rise to fluid milk- shades we see
today in every city of our country.
Analysis of Milk Industry
Traditionally, in India dairying has been a rural cottage industry. Semi-commercial dairying
started with the establishment of military dairy farms and co-operative milk unions
throughout the country towards the end of the nineteenth century.
In earlier years, many households owned their own ‗family cow‘ or secured milk from a
neighbor who had one. With the increase in urban population fewer households could afford
to keep a cow for private use & moreover there were other problems also like the high cost of
milk production, problems of sanitation etc. restricted the practice; and gradually the family
cow in the city was eliminated and city cattle were all sent back to the rural areas.
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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 see
today in every city of our country.
Prior to the 1850s most milk was necessarily produced within a short distance of the place of
consumption because of lack of suitable means of transportation and refrigeration.
The Indian Dairy Industry has made rapid progress since Independence. A large number of
modern milk plants and product factories have since been established. These organized
dairies have been successfully engaged in the routine commercial production of pasteurized
bottled milk and various Western and Indian dairy products. With modern knowledge of the
protection of milk during transportation, it became possible to locate dairies where land was
less expensive and crops could be grown more economically.
In India, the market milk technology may be considered to have commenced in 1950, with
the functioning of the Central Dairy of Aare Milk Colony, and milk product technology in
1956 with the establishment of AMUL Dairy, An and.
Indian dairy sector is still mainly an unorganized sector as barely 10% of our total milk
production undergoes organized handling.
Indian Dairy Industry –Facts & Figures
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15. Beginning in organized milk handling was made in India with the establishment of Military
Dairy Farms.
Handling of milk in Co-operative Milk Unions established all over the country on a small
scale in the early stages.
Long distance refrigerated rail-transport of milk from Anand to Bombay since 1945
Pasteurization and bottling of milk on a large scale for organized distribution was started at
Aarey (1950), Calcutta (Haringhata, 1959), Delhi (1959), Worli (1961), Madras (1963) etc.
Establishment of Milk Plants under the Five-Year Plans for Dairy Development all over
India. These were taken up with the dual object of increasing the national level of milk
consumption and ensuing better returns to the primary milk producer. Their main aim was to
produce more, better and cheaper milk.
Milk Production
India's 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.
India's 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.
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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 India's 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 addition
Milk Production
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17. The Upside
Increasing awareness:
As India enters an era of economic reforms, agriculture, particularly the livestock sector, is
positioned to be a major growth area. The fact that dairying could play a more constructive
role in promoting rural welfare and reducing poverty is increasingly being recognized. For
example, milk production alone involves more than 70 million producers, each raising one or
two cows/buffaloes. Cow dung is an important input as organic fertilizer for crop production
and is also widely used as fuel in rural areas. Cattle also serve as an insurance cover for the
poor households, being sold during times of distress.
Supply matches demand:
Efforts to increase milk production by dairy farmers are strongly influenced by the degree to
which demand signals are transmitted through the marketing system. Cooperatives have
played an important role in transmitting the message of urban market demand to them. Since
the demand in the urban scenario is rapidly increasing so is the supply generated by the
farmers.
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 rural
marketable surplus of milk by about 40 per cent by 2005 AD.
The Downside
Technological gaps:
Several areas of the dairy industry can be strengthened by the induction of state-of-the-art
technologies from overseas. Those who bring in new technologies or sign joint ventures with
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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 microbiological
attributes of the milk collected. The use of clarification and bactofugation in raw milk
processing can help improve quality of the milk products.
Better operational efficiencies are needed to improve yields, reduce waste, minimize
fat/protein losses during processing, control production costs, save energy and extend shelf-
life. The adoption of Good Manufacturing Practices (GMP) and HACCP would help
manufacture milk products conforming to international standards and thus make their exports
competitive.
Latest packaging technology can help retain nutritive value of packaged products and extend
their shelf-life. For proper storage and transportation, cold chain needs to be strengthened.
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19. Analyzing the product - Milk
Milk- An almost complete food
Milk is not only an excellent source of Calcium, which is vital for strong bones and teeth; it
also 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, FOLIC
ACID 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:
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20. Supply:
Supply of milk is affected by the seasonal influences, in summers the milk supplies dip & in
winters it soars. Therefore, dairies generally make use of the surplus milk available with
them during winters for manufacturing milk powder so that they can meet the increased
demand 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 an
otherwise impeccable distribution system of Mother Dairy. Since then, to its credit Mother
Dairy 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 easily
available.
BACKGROUND TO STUDY-VCS CONCEPT
In 1945, encouraged by the nationalist leader SardarVallabbhai Patel, Tribhuvantdas Patel, a
farmer 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 the
milk producers to form cooperatives to combat the monopoly of Polson‘s dairy. The dairy
farmers then went a step further and decided to form their own union to deal directly with
final buyer .in 1946s ,the milk producer union ,kaira district cooperative milk producer‘s
union Ltd.(KDCNPUL) was registered with patel as its first chairman. it began with two
village cooperatives which collected 250 liters of milk every day. In 1955, KDCMPUL was
renamed Anand milk union limited (AMUL).
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21. THE ANAND PATTERN
The 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. The
VCS procured milk from the members; district unions transported and processed the milk
products, while the role of federations was that of marketing, strategic planning and
investment. All facilities to process the milk were owned by the farmers and managed by
professionals.
FUNCTION OF VILLAGE COOPERATIVE SOCIETIES, DISTRICT UNION AND
STATE FEDERATION
Village 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.
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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 1996
Post independence, India was a milk- stressed country with domestic demand far outstripping
the domestic production of milk .given the nutrition and hunger problems in the country, the
government took upon itself the task of development of the domestic dairy industry. The
two-pronged objectives for the government were first to augment the supply of milk for
domestic consumption and second to increase the returns to dairy farmers by providing the
infrastructure for producing value added dairy products.
As one of the biggest programs for development of dairy came the ―Operation Flood‖ in the
year 1970-71. This was a rural development program me, which received liberal grants from
the government of India (NDDB), the world bank and the European Economic Commission
(EEC). Operation flood worked to create an integrated national milk market, and established
institutions to cost effectively procure, process and market the milk and milk products it
worked through setting-up of small milk producers cooperatives, which procured milk from
in the village and provided with input and service.
IMPACTS OF OPERATION FLOOD
Operation Flood has had far reaching impact on the development of modern dairying
facilities in the country. It has not only impacted growth in production and distribution of
milk and milk products, but also dominated the rural development scenario by providing
sustainable livelihood options to millions of rural farmers. A world bank audit showed that of
the Rs. 200 crores invested in Operation Flood (ll), the net return into the rural economy has
Rs. 24000 crores per year over a period of ten years, or a total or a total of Rs. 24000 crores
in all, No other major development program in the world has matched this input-output ratio.
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23. INDUTRY STRUCTURE- LIQUID MILK AND MILK PRODUCT
A 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 an
abysmal 10%. On the other hands 38.9 million tons of liquid milk was produced in India in
2000-01, out of which only 15.4 % was processed, and the rest was sold unprocessed. In both
the 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, most
of the milk and milk products are either sold unprocessed, or processed locally into low
value-added products. Such products in absence of hygiene, quality and safety are unable to
command premium prices from the consumers. Few reasons why the informal sector is able
to survive and complete in the market with organized dairy players are as follows first, the
informal milk vendors are able to work with very low levels of investments. Thus despite
low volumes ,they are able to compete with the organized players they procure milk daily
from 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 with
organized players. Second most of the small informal milk vendor have very small operating
cycles, and are able to turn their stocks daily and recover their money from the business. In
such a scenario, they are in a position to pay higher prices to farmers then most cooperative
and are able to procure milk from the members of the cooperatives without making any
significant investment in developing procurement base.
Cooperative Unions
Over almost half a century ago, the life of a farmer in Kaira District was very much like that
of his counterpart anywhere else in India. His income was derived almost entirely from
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24. seasonal crops. The income from selling milk was undependable. The marketing and
distribution system for the milk was controlled by private traders and middlemen. As milk is
perishable, farmers were compelled to sell it for whatever they were offered. Often, they had
to sell cream and ghee at throwaway prices. In this situation, the one who gained was the
private trader. Gradually, the realization dawned on the farmers that the exploitation by the
trader could be checked only if they market their milk themselves. In order to do that they
needed to form some sort of an organization. This realization is what led to the establishment
of 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 husbandry
and 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.
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25. This income is helping these people not only to liberate themselves from the stronghold of
poverty but also to elevate their social status.
The system succeeded mainly because it provides an assured market at remunerative prices
for producers' milk besides acting as a channel to market the production enhancement
package. What's more, it does not disturb the agro-system of the farmers. It also enables the
consumer an access to high quality milk and milk products. Contrary to the traditional
system, when the profit of the business was cornered by the middlemen, the system ensured
that 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 competition
snapping at its heels, the sector which has been governed by arcane laws until the recent past
will see a special provision inserted in the Companies Act, 1956. All the cooperative unions
will be re-christened cooperative companies; they will come under the purview of the
registrar of companies, instead of the registrar of cooperatives.
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26. While they will have to adhere by the audit procedures like any corporate, they will differ
from ordinary companies in many ways. Not everyone can join a cooperative. Only users can
enroll as members at a fixed membership fee. Quantum of business and not equity capital
will see an election to the board. And there will be flexibility to raise capital from members
and outside.
Dairy Cooperatives account for the major share of processed liquid milk marketed in the
country. Milk is processed and marketed by 170 Milk Producers' Cooperative Unions, which
federate into 15 State Cooperative Milk Marketing Federations.
The Dairy Board's programmes and activities seek to strengthen the functioning of Dairy
Cooperatives, as producer-owned and controlled organizations. NDDB supports the
development of dairy cooperatives by providing them financial assistance and technical
expertise, ensuring a better future for India's farmers.
Over the years, brands created by cooperatives have become synonymous with quality and
value. Brands like Amul (GCMMF), Vijaya (AP), Verka (Punjab), Saras (Rajasthan).
Nandini (Karnataka), Milma (Kerala) and Gokul (Kolhapur) are among those that have
earned customer confidence.
Some of the major Dairy Cooperative Federations include:
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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 established
our country as the largest milk-producing nation in the world!
National Dairy Development Board
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29. The National Dairy Development Board was created to promote, finance and support
producer-owned and controlled organizations. NDDB's programmes and activities seek to
strengthen farmer cooperatives and support national policies that are favorable to the growth
of such institutions. Fundamental to NDDB's efforts are cooperative principles and the
Anand Pattern of Cooperation.
A commitment to help rural producers help themselves has guided the Dairy Board's work
for more than 30 years. This commitment has been rewarded with achievements made by
cooperative dairies in milk production, employment generation, and per capita availability of
milk, foreign exchange savings and increased farmer incomes.
The National Dairy Development Board (NDDB) has replaced exploitation with
empowerment, convention with modernity, stagnation with growth and transformed dairying
into an instrument for the development of Indian farmers.
The National Dairy Development Board was created in 1964 in response to the Prime
Minister Lal Bahadur Shastri's call to "transplant the spirit of Anand in many other places".
He wanted the Anand model of dairy development - with institutions owned by rural
producers, which were sensitive to their needs and responsive to their demands - replicated in
other parts of the country.
The Board's creation was routed in the conviction that our nation's socio-economic progress
lies largely on the development of rural India.
Thus NDDB's mandate is to promote, finance and support producer-owned and controlled
organizations. NDDB's programmes and activities seek to strengthen farmer cooperatives
and 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 getting
much more competitive and wants to strengthen the position of cooperatives through a multi-
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30. pronged action plan with an outlay of Rs 800 crore (Rs 8-billion). This includes using MDFL
to enter into 51:49 joint venture companies with state cooperative federations to assist them
with marketing value added products and to help them in other ways to become self-reliant
enterprises.
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31. SWOT ANALYSIS OF INDIAN DAIRY INDUSTRY
STREANGTHS
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 rates
WEAKNESSES
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. 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
33. CHAPTER 3
COMPANY PROFILEESEARCH
DESIGN
COMPANY OVERVEIW
33
34. Milk is industrialist Mukesh Ambani‘s newest business muscle and his corporate dairy is
looking for refrigerator space at mom and pop stores, in addition to vending from Reliance
Retail stores.
With the beginning of sale of ‗Dairy Pure‘ through general milk retailers, as opposed to
mostly through Reliance Retail-owned stores now, the company expects further growth in
this 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 than
that of its rivals for the same price.
When asked, the company spokesperson said that Reliance Retail was expanding and further
strengthening its milk retailing business through its ‗Dairy Pure‘ brand.
Besides Reliance stores, the milk brand is also being sold ―through general trade (including
milk retailers) in Haryana, Punjab, Andhra Pradesh, Tamil Nadu, Rajasthan, NCR (National
Capital Region) and Himachal Pradesh,‖ the spokesperson added.
On their part, rivals are welcoming a large corporate in the market saying it would benefit
both farmers and customers, but are not perturbed by the competitive pricing as they consider
it 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 built
overnight in milk and needs strong procurement and marketing network.―Reliance Retail‘s
milk brand has not got much presence in the market as yet. But it is good for the market to
have more players and entry of a large corporate house would be beneficial for farmers as
well as customers,‖ Amul‘s Chief General Manager R S Sodhi said.
34
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 lower
pricing by Reliance Retail, as it had no significant presence as yet.
Still, Reliance Dairy Foods Ltd, the milk and other dairy products subsidiary of
petrochemicals 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 last
financial year. The company believes the business would grow further as it was also looking
at expanding product portfolio as also processing and packaging facilities.
―We see this business further growing with the extension of our product portfolio. Reliance
Retail currently has its processing and packaging facilities in Andhra Pradesh, Haryana and
Rajasthan and would look at expanding this over a period of time in other states,‖ the
spokesperson said.
The official, however, declined to comment on investments to be made for expansion as also
its targeted market size for the dairy business.
Reliance Dairy Foods‘ total assets stood at Rs 82.23 crore at the end of the last financial
year, up from about Rs 39 crore at the end of 2007-08, according to the information in
Reliance Industries‘ annual report.
35
36. Operational Review
The Company strengthened its presence in the milk retailing business by launching ‗Dairy
Pure‘ brand that are sold through general milk retailers along with Reliance Fresh stores. The
Company presently operates in Andhra Pradesh, Haryana, Tamil Nadu, Maharashtra, Delhi,
Punjab, and Rajasthan and is confident to further grow with the extension of product
portfolio. The Company has incurred a loss of Rs.415.29 Lakh for the financial year ended
March 31, 2010.With the optimization
Of resources and further scaling up of operations, the Company is confident of posting better
results in the future.
1. a) The Company has maintained proper records showing full particulars, including
quantitative details and situation of fixed assets.
b) Fixed assets have been physically verified by the management in a phased periodical
manner as per regular program of verification, which in our opinion is reasonable, having
regard to the size of the Company and nature of its assets. As informed, no material
discrepancies 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 our
opinion, the frequency of verification is reasonable.
b) The procedures of physical verification of inventories followed by the management are
reasonable and adequate in relation to the size of the Company and the nature of its business.
36
37. c) The Company has maintained proper records of inventory. As explained to us, there was
no material discrepancies noticed on physical verification of inventory.
3. The Company has neither granted nor taken any loan, secured or unsecured to/from
companies, firms and other parties covered in the Register maintained under Section 301 of
the Companies Act, 1956.Therefore, the provisions
Of clause (iii) (b), (c), (d), (f), (g) of the Companies (Auditor‘s Report) Order 2003, (as
amended) are not applicable to the Company.
4. In our opinion and according to the information and explanations given to us, there is an
adequate internal control system commensurate with the size of the
Company and the nature of its business for the purchase of inventory and fixed assets and
also for the sale of goods and services. During the course of our audit, no major weakness
has been noticed in the internal control system
in respect of these areas.
5. According to information and explanation given to us, we are of the opinion that there are
no contracts or arrangements referred to in section 301 of the Companies Act. 1956 that
needs to be entered into the register maintained under section 301. Therefore, the provisions
of 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 the
public.
7. In our opinion, the Company has an internal audit system
Commensurate with the size and nature of its business.
8. To the best of our knowledge and as explained, the Central Government has not prescribed
the maintenance of cost records under Section 209 (1) (d) of the Companies Act, 1956.
37
38. 9. In respect of statutory dues:
a) According to the records of the Company, the Company is regular in depositing with
appropriate authorities undisputed statutory dues including
Provident fund, investor education and protection fund, employees‘ state insurance, income-
tax, sales-tax, wealth-tax, service tax, customs duty, cess and other statutory dues applicable
to it. According to the information and explanations given to us, no undisputed amounts
payable in respect of provident
fund, investor education and protection fund, employees‘ state insurance, income-tax,
wealth-tax, service tax, sales-tax, customs duty, cess and other undisputed statutory dues
were outstanding, as at March 31, 2010 for a period of more than six months from the date
they 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 been
deposited on account of any dispute.
10. The Company has been registered for a period of less than five years and hence we are
not required to comment on whether or not the accumulated losses at the end of the financial
year is fifty per cent or more of its net worth and whether it has incurred cash losses in such
financial 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. CONSUMER BEHAVIOUR
Consumer behaviour is the study of when, why, how, and where people do or do not buy a
product. 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 behavioural
variables in an attempt to understand people's wants. It also tries to assess influences on the
consumer from groups such as family, friends, reference groups, and society in general.
Customer behaviour study is based on consumer buying behaviour, with the customer
playing the three distinct roles of user, payer and buyer. Research has shown that consumer
behavior is difficult to predict, even for experts in the field.[1] Relationship marketing is an
influential asset for customer behaviour analysis as it has a keen interest in the re-discovery
of the true meaning of marketing through the re-affirmation of the importance of the
customer or buyer. A greater importance is also placed on consumer retention, customer
relationship management, personalisation, customisation and one-to-one marketing. Social
functions can be categorized into social choice and welfare functions.
Each method for vote counting is assumed as social function but if Arrow‘s possibility
theorem is used for a social function, social welfare function is achieved. Some
specifications of the social functions are decisiveness, neutrality, anonymity, monotonicity,
unanimity, homogeneity and weak and strong Pareto optimality. No social choice function
meets these requirements in an ordinal scale simultaneously. The most important
characteristic of a social function is identification of the interactive effect of alternatives and
creating a logical relation with the ranks. Marketing provides services in order to satisfy
customers. With that in mind, the productive system is considered from its beginning at the
production level, to the end of the cycle, the consumer.
All of us are consumers. We consume things of daily use, we also consume and buy
these products according to our needs, preferences and buying power. These can be
consumable goods, durable goods, speciality goods or, industrial goods.
40
41. What we buy, how we buy, where and when we buy, in how much quantity we buy
depends on our perception, self concept, social and cultural background and our age and
family cycle, our attitudes, beliefs values, motivation, personality, social class and many
other factors that are both internal and external to us. While buying, we also consider
whether to buy or not to buy and, from which source or seller to buy. In some societies there
is a lot of affluence and, these societies can afford to buy in greater quantities and at shorter
intervals. In poor societies, the consumer can barely meet his barest needs.
The marketers therefore tries to understand the needs of different consumers and having
understood his different behaviours which require an in-depth study of their internal and
external environment, they formulate their plans for marketing.
Management is the youngest of sciences and oldest of arts and consumer behaviour in
management is a very young discipline. Various scholars and academicians concentrated on
it at a much later stage. It was during the 1950s, that marketing concept developed, and thus
the need to study the behaviour of consumers was recognised. Marketing starts with the
needs of the customer and ends with his satisfaction. When every thing revolves round the
customer, then the study of consumer behaviour becomes a necessity. It starts with the
buying of goods. Goods can be bought individually, or in groups. Goods can be bought under
stress (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 activity
involved in acquiring, evaluating, using and disposing of goods and services. This definition
clearly brings out that it is not just the buying of goods/services that receives attention in
consumer behaviour but, the process starts much before the goods have been acquired or
bought. A process of buying starts in the minds of the consumer, which leads to the finding
of alternatives between products that can be acquired with their relative advantages and
disadvantages. This leads to internal and external research. Then follows a process of
decision-making for purchase and using the goods, and then the post purchase behaviour
which is also very important, because it gives a clue to the marketers whether his product has
been a success or not.
41
42. To understand the likes and dislikes of the consumer, extensive consumer research studies
are 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 consumer
Marketing 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. (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 image
Stages of the consumption process:
Pre-purchase: problem recognition & information search
Purchase: mental evaluations & making of decision
Post-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 is
made.
43
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. 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. 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. 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. A lot of brand switching
Marketing 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 theory
1. 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. 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. 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. 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. · 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. 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. 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. 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. ENVIRONMENTAL FACTORS BUYER'S BLACK BOX
BUYER'S
Marketing Environmental Buyer RESPONSE
Decision Process
Stimuli Stimuli Characteristics
Problem
recognition
Economic Attitudes Information
Product choice
Product Technological Motivation search
Brand choice
Price Political Perceptions Alternative
Dealer choice
Place Cultural Personality evaluation
Purchase timing
Promotion Demographic Lifestyle Purchase
Purchase amount
Natural Knowledge decision
Post-purchase
behaviour
The black box model shows the interaction of stimuli, consumer characteristics, decision
process and consumer responses. It can be distinguished between interpersonal stimuli
(between people) or intrapersonal stimuli (within people).[3] The black box model is related
to the black box theory of behaviourism, where the focus is not set on the processes inside a
consumer, but the relation between the stimuli and the response of the consumer. The
marketing stimuli are planned and processed by the companies, whereas the environmental
stimulus are given by social factors, based on the economical, political and cultural
circumstances of a society. The buyers black box contains the buyer characteristics and the
decision process, which determines the buyers response.
The black box model considers the buyers response as a result of a conscious, rational
decision 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 the
consumer.
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57. Information search
Once the consumer has recognised a problem, they search for information on products and
services that can solve that problem. Belch and Belch (2007) explain that consumers
undertake both an internal (memory) and an external search.
Sources of information include:
Personal sources
Commercial sources
Public sources
Personal experience
The relevant internal psychological process that is associated with information search is
perception. 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 for
researchers to forecast the purchasing plans of consumers using brief descriptions of the
products of interest.
The selective perception process
Stage 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.
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58. The implications of this process help develop an effective promotional strategy, and select
which sources of information are more effective for the brand.
Information evaluation
At 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 the
consumer's evoked set? Consumers evaluate alternatives in terms of the functional and
psychological benefits that they offer. The marketing organization needs to understand what
benefits consumers are seeking and therefore which attributes are most important in terms of
making a decision. It also needs to check other brands of the customer‘s consideration set to
prepare the right plan for its own brand.
Purchase decision
Once the alternatives have been evaluated, the consumer is ready to make a purchase
decision. Sometimes purchase intention does not result in an actual purchase. The marketing
organization must facilitate the consumer to act on their purchase intention. The organization
can use a variety of techniques to achieve this. The provision of credit or payment terms may
encourage purchase, or a sales promotion such as the opportunity to receive a premium or
enter a competition may provide an incentive to buy now. The relevant internal
psychological process that is associated with purchase decision is integration. Once the
integration is achieved, the organization can influence the purchase decisions much more
easily.
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 for
information on the product. The possibility of alternative options, meaning whether there is
another better or cheaper product available. The choice to purchase the product and then
finally the actual purchase of the product. This shows the complete process that a consumer
will most likely, whether recognisably or not, go through when they go to buy a product.
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59. Postpurchase evaluation
The EKB model was further developed by Rice (1993) which suggested there should be a
feedback loop, Foxall (2005) further suggests the importance of the post purchase evaluation
and that it is key because of its influences on future purchase patterns.
Other influences
Consumer behaviour is influenced by internal conditions such as demographics,
psychographics (lifestyle), personality, motivation, knowledge, attitudes, beliefs, and
feelings. Psychological factors include an individuals motivation, perception, attitude and
belief, 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 mix
factors
What is Brand Switching?
Sometimes known as brand jumping, brand switching is the process of choosing to switch
from 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 for
customers to build up a great deal of brand loyalty due to such factors as quality, price, and
availability. To encourage switching brands, advertisers will often target these three areas as
part 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 to
try a new one. The idea is to convince the end user that it is possible to purchase the same
amount of product while spending less money. Ideally, this means that the consumer can use
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60. the savings for other purchases, possibly even a luxury item of some sort. The idea of more
discretionary resources in the monthly budget can be an effective in the encouragement of
jumping 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, the
motivation 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 time
consumers 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 to
present the new brand as being of superior quality to the established brand. Essentially, this
means demonstrating that the new brand can do everything the older brand can do, plus a
little more. For example, a product that can be used to dust wood, glass, and plastic surfaces
may be more attractive than a product that is formulated for glass only. The implication is
that 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 Market
Share
Observed purchase behavior is the result of the combined effect of preference and
availability. A multibrand choice model of a frequently purchased consumer good is
developed. The model allows for the heterogeneity of the population with respect to brand
preference. It also considers that all brands are not identically distributed and are thus not
equally available to the potential buyers of the product class. The model uses the brand
switching matrix in order to parcel out the effect of preference and availability. It is
compared with the Hendry System which also uses the brand switching matrix for the
purpose of measuring brand substitution or competition.
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61. The Hendry System being a special case of the model presented in this paper, the likelihood
ratio test is employed to test the more general model against Hendry. The estimation and
testing procedure uses cooking oil data from 1,961 households who remained in the Secodip
Consumer Panel, France, for the entire 1971–1972 period. The variable of availability is
found 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 quantitative
summary of multibrand markets, namely the switching matrix. More efficient use of panel
data by marketing decision makers should result.
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63. OBJECTIVE OF RESEARCH
1. The main objective of this project is to probe the reasons for less market share of Reliance
Dairy and to find out the measures that can be adopted to increase the sales
2. To study the distribution channel in the retail chain of Reliance Dairy
3. To identify the issues related to Reliance Dairy retailers and distributors
4. To get the retailers feedback from specific regions
5. To add up new retailers in the area
6. To study Reliance Dairy positioning in the mind of the consumers vis-à-vis competitors
7. To find out the factors that affect consumer‘s decision to purchase milk
8. To find out short term problem in every sub-region that can be sorted out
9. Suggesting viable recommendations to be implemented in the area
PROBLEM
Evaluate the consumer behavior about the packed milk and factor effection the switch off
brand 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.
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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.
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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
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66. There are some sauces from where data collected. These are given below:-
http://www.indiadairy.com
http://www.amul.com
GROUP INTERVIEW
A focus group interview is an interview conducted by a trained ia nonstructural and natural
manner with a small group of respondents. the moderator led the discussion. The main
purpose of people from the appropriate target market talk about issue of interest to the
researcher. The value of the technique is in the unexpected finding often obtained from a free
–flowing group discussion
DESCRIPTIVE RESEARCH (CONCLUSIVE RESEARCH)
The major objective of descriptive research is to describe something usually market
characteristic. 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.
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67. RESEARCH
DESIGN
EXPLORATORY DESCRIPTIVE
RESEARCH RESEARCH
SECONDARY DATA GROUP INTERVIEW DESCRIPTIVE INTERVIEW
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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.
METHODOLOGY
There are generally four basic methods for exploratory research.
Qualitative research: It often used for generating hypotheses and identifying variables that
should be included in the research.
Survey of expert: In this method a formal or informal interview is done with expert in the
corresponding field to get an expertise of overall subject matter.
Pilot survey: This is an unstructured or casual survey or casually data is collected in which
most questions are asked open ended.
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70. Secondary data analysis: it is used to get better approach to the problem and its complication
to formulate an appropriate research design.
RESEACH METHODOLOGY
1. SECONDARY DATA
Delhi as a capital of India center of all social, economical and political activities and it also
counted as one of the most dynamic market. On milk point of view Delhi NCR among the
dynamic milk market in the country , is dominated by Mother Dairy and Amul
The Delhi market comprise 60 lakh liters currently and is dominated by NDDB owned
Mother dairy and Amul both nearly fulfills 90% of the total market demand. The other
organized player Paras dairy, Param, Diarybest, gopalji etc comprises of 8-9% of the total
market share.
Amul and NDDB‘s non-compete agreement has prevented the former from launching it
liquid milk in the Delhi market till 2003. With the non complete agreement run out, Amul
launched its fresh milk in two variants – Full cream and toned milk at par with of mother
dairy. Amul ,to its delight ,has seen the demand for its milk going up by leap and bound in
the city and is now planning to enter in alliances with dairies located around Delhi such
Indian Potash to cater the demand.
Amul already has lease agreement with Quality Dairy unit in Faridabad where it is planning
to increase its capacity and has also decided to set up a new 5 lakh liter per day dairy plant at
an investment of Rs. 40 crore in Haryana to cater to the north market.
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