Organizational Buying Behaviour

Organizational buying behaviour is a choice making procedure by which formal associations build up the requirement for products and services and recognize, assess and pick among available options of brands and suppliers. The organizational buying process is entirely different from the consumer buying process. While buying decisions are made relatively easily and quickly by individual customers, organisational buying involves thorough and deep analysis. Organizations purchase products ranging from highly complex machinery to small components. In an organization, the purchase decisions are influenced by several individuals and are not made in isolation by an individual. Organizational buyers are more concerned about the price and quality of the product along with the service being provided by the vendor. Service also plays an important role, because no organization would like to buy goods from a vendor who cannot provide timely and efficient service. Organizational markets normally purchase the goods or services for producing other goods and services, using these as raw materials. There are also resellers, who purchase the products to sell directly to other customers without any modifications. In Amul dairy cooperatives in Gujarat have created an economic network that links more than 3.1 million village milk producers with millions of consumers in India. These cooperatives collect on an average 9.4 million litres of milk per day from their producer members. Another example is retailers that buy amul milk in bulk to sell in their shop. Buying in bulk helps in getting the buyer better and cheap prices for that product. The Organizational Buying Process: ●In NEED RECOGNITION the organization recognizes a problem or need that can be met by acquiring a good or service. For example for making chocolates different ingredients are needed. So at this stage the need would be established. ●In NEED DESCRIPTION buyer determines the needed item’s general characteristics and required quantity. Here the characteristics and quantity of milk required is specified on quality terms like fat content etc. ●In PRODUCT SPECIFICATION buyer develops technical specifications of the product to be purchased. ●In SUPPLIER SEARCH the buyer identifies the most suitable supplier through trade directories and then contacts other companies, trade advertisements, trade shows and the internet. The Anand Pattern is essentially an economic organizational pattern to benefit small producers who join hands forming an integrated approach in order to economy of a large scale business. The whole operation is professionally managed so that the individual producers have the freedom to decide their own policies each member's milk is tested for quality with payments based on the percentage of fat and SNF. At the end of each year, a portion of the DCS profits is used to pay each member a patronage bonus based on the quantity of milk poured. ●In PROPOSAL SOLICITATION the buyer invites qualified suppliers to submit proposals. ●In SUPPLIER SELECTION the buyer selects a supplier according to the needs of the organization and attributes of the supplier. The final selection of the supplier will be done at this stage. ●In ORDER ROUTINE SPECIFICATION the buyer negotiates the final order with the supplier, listing the technical specifications, quantity needed, expected time of delivery, return policies, warranties etc. ●In PERFORMANCE REVIEW the buyer periodically reviews the performance of the chosen supplier The Amul brand is not only a product, but also a movement. It is in one way, the representation of the economic freedom of farmers’ .Amul continues to inspire one and all interested not only in dairying but also in other areas, people involved in the rural development and sustaining livelihood through massive employment generation.

The Brand

AMA defines brand and branding as "a name,term,sign,symbol or design or a combination of them,intended to identify the goods or devices of one seller or a group of sellers and to differentiate them from those of competitors."

Amul is an Indian dairy cooperative, based at Anand in the state of Gujarat, India.

Formed in 1946, it is a brand managed by a cooperative body, the Gujarat Co-operative Milk Marketing Federation Ltd. (GCMMF), which today is jointly owned by 3.6 million milk producers in Gujarat. Amul spurred India's White Revolution, which made the country the world's largest producer of milk and milk products. In the process Amul became the      largest food brand in India and has ventured into markets overseas.

BRAND MANAGEMENT

Brand management is a function of marketing that uses special techniques in order to increase the perceived value of a product. Based on the aims of the established marketing strategy, brand management enables the price of products to grow and builds loyal customers through positive associations and images or a strong awareness of the brand.

STRATEGIES:

1. The Ultimate Strategy

The Amul girl was the brainchild of Sylvester Da Cunha, the managing director of the advertising agency AS. The ads were designed as a series of hoardings with designed relating to day-to-day issues. The biggest reason for this is the topical nature of the ads. Amul ads have witty one liners which capture relative events that have caught the fancy of the nation.

2. Low-Cost Price Strategy

Low Cost Price Strategy was adopted to make the product affordable and alluring to consumers by granting them value for money. The main aim of Amul is to provide quality products to consumers at minimal cost. The goal of Amul is to provide maximum profit in terms of money to the farmers. Low Cost of production of Amul: Milk production is scale insensitive and labour intensive. Due to low labour cost, cost of production of milk is significantly lower in Amul.

3. Defence Strategy

Moving consumers to loose milk to packaged milk and gradually move them up the value chain(tetra pack to beverage).

4. Product positioning Strategy

Amul is India's first Pro-biotic Wellness

                                  Amul takes to global sports events 

CONCLUSION

Amul can venture into offering low-fat versions of milk and will help capture the market of second and third generation Indians and Global Market.

Consumer and Consumption

Consumer spending, consumer demand, consumption, or consumption expenditure is the purchasing of goods and services by individuals or families. It is the largest part of aggregate demand at the macroeconomic level. There are two components of consumption in the basic model: induced consumption (which is affected by the level of income) and autonomous consumption (which is not).The customer satisfaction decides the fate of the product and organization. There is various factors influence to the customer satisfaction.

The 2014-15 figures indicate that India produced 147 million tons of milk which makes us the world's largest milk producer. Though a large part of this market is raw buffalo milk, but pasteurized cow's milk is popular in Tier 1 and Tier 2.

Consumers’ primary preference is taste; health and nutrition come after that. So whatever products Amul provides, if people do not get the taste right then it will not work. So if we look at sugar-free or low-fat products, they don’t even account for 10% of the brand’s revenues. Such products don’t even sell in 1% of Amul outlets. The demand is so scattered. Meanwhile, brands like Amul Gold, which is high-fat milk, is a topseller. 

While the act permits four types of milk (double toned, toned, standardized and whole) no dairy in India sells more than two types. So, Amul not only established a presence in all existing segments but also created fresh ones. This later helped during price hikes because consumers could drop from the variety they had favoured to a less expensive one and yet stay within the Amul fold.

In the milk market, consumers show little preference for any brand or even any milk type. They easily shift between the different varieties for price reasons and also because they are unfamiliar with the ingredients that make up milk. However, Amul first had to be available to the consumer. Milk being a primary need, the housewife would settle for another brand(or type) if her preferred brand was unavailable when she needed it most-early in the morning. Easy accessibility seemed to be the key, in other words, perfect and synchronized distribution channels within the vicinity of the consumer’s home. Wide range ofamul product categories caters to consumers across all market segments. For example, Amul Kool is targeted at children, while teenagers prefer Kool Cafe, as it has a cool imagery associated with it

AMUL has different variants of its product for every one –

• Amul gold full cream milk – It has high fat and SNF content, and is favoured by parents for their children.
• Amul Saathi – Double-toned and lower-priced which is low on fat and high on SNF, is preferred by diabetics, blood pressure patients, and the elderly 
• Amul Standardized Milk branded as Amul Shakti and Amul toned milk got itself a new name Amul Taaza 
• Amul has never forgotten its primary customer – Amul collects 7 million litres of milk from 2.6 million farmers(many illiterate) 
• Product for youth – Amul launched chocolate milk under brand name of “Amul Kool Koko” targeting the youth 
• Product for diabetic people – India’s first pro-biotic wellness icecream and sugar free delights for diabetics. 

Over the last five and a half decades, dairy cooperatives in Gujarat have created a network that links more than 3.1 million village milk products with millions of consumers in India. GCMMF is India's largest food product marketing organization with annual turnover (2014-15) US$ 3.4 billion. Its daily milk procurement is approx 14.85 million lit per day from 18,536 village milk cooperative societies, 17 member unions covering 31 districts, and 3.37 million milk producer members. More than 70% of the members are small or marginal farmers and landless labourers including a sizeable population of tribal folk and people belonging to the scheduled castes.

Customer preferences are changing and so are their spending patterns. As a result, the share of value added branded products in overall revenues, has been rising steadily.

Distribution Decisions

Having a strong product does little good if customers are not able to easily and conveniently obtain it. Along with price and promotion decisions, a decision has to be made on the distribution system. There are two components to this - the physical (order processing storage/warehousing and transport) and the institutional aspects. The latter involves the choice of agents, distributors, wholesalers, retailers, direct sales or sales forces.

Amul products are available in over 500,000 retail outlets across India through its network of over 3,500 distributors. There are 47 depots with dry and cold warehouses to buffer inventory of the entire range of products. GMCMMF has 42 regional distribution centres in India and exports to more than 15 countries.

A marketer’s distribution system must be both effective and efficient.

In order to facilitate an effective and efficient distribution system many decisions must be made including (but certainly not limited to):

·         Assessing the best distribution channels for getting products to customers

·         Determining whether a reseller network is needed to assist in the distribution process

·         Arranging a reliable ordering system that allows customers to place orders

·         Creating a delivery system for transporting the product to the customer

Resellers

These organizations, also known within some industries as intermediaries, distributors or dealers, generally purchase or take ownership of products from the marketing company with the intention of selling to others. If a marketer utilizes multiple resellers within its distribution channel strategy the collection of resellers is termed a Reseller Network. These organizations can be classified into several sub-categories including:

·         Retailers.

·         Wholesalers

·         Industrial Distributors 

·         Specialty Service Firms

These are organizations that provide additional services to help with the exchange of products but generally do not purchase the product (i.e., do not take ownership of the product):

·         Agents and Brokers

·         Distribution Service Firms 

·         Others

The success of AMUL has depended on how well it has formed or managed to become a part of these existing network of suppliers and consumers. These economies are complex and have unique characteristics that range from underdeveloped markets to small and fragmented supplier base.

In the end:

It is noteworthy that successes such as building networks, developing trusts and value in networks, developing fair mechanisms for sharing benefits across the supply chain, coordination for operational effectiveness were achieved within the framework of a network of cooperatives organized in a hierarchical manner. 

Product Life Cycle

Consumers buy millions of products every year. And just like consumers, these products have a life cycle. Older, long-established products eventually become less popular, while in contrast, the demand for new, more modern goods usually increases quite rapidly after they are launched. The product life cycle has 4 very clearly defined stages, introduction,maturity,growth and decline each with its own characteristics that mean different things for business that are trying to manage the life cycle of their particular products.

INRODUCTION

The first dairy, Kaira District Co-operative Milk Producers’ Union was established in the year 1946 in Anand district of Gujarat, which created Amul in 1955 and handed over the brand name to GCMMF in 1973. Since farmers sold all the milk in Anand through a co-operative union, it was commonly resolved to sell the milk under the brand name AMUL. At the initial stage only 250 liters of milk was collected every day. But with the growing awareness of the benefits of the cooperativeness, the collection of milk increased.Between 1955 and 1970, milk production grew by barely 1 per cent annually, while per capita milk availability declined by an equivalent amount.

GROWTH

Amul milk production increased to 31.6 million metric tons by 1980-81, 53.9 million by 1990-91, and 84.6 million by 2001-2. The annual growth rate was 4.08 per cent during the first phase of Operation Flood. It was much higher (7.85 per cent) during the second phase, and production continued to grow at 5.05 per cent per year during the third phase.

As a result of substantial increase in milk production, milk consumption in India has risen from a low of 112 grams per day in 1968-69 to over 226 grams per day in 2002. With growing competition from brands like Nestle, Mother dairy, Britannia, Gokul; Amul introduced new products like Amul milk gold, Amul moti, Amul chai maza, Amul slim trim etc.

MATURITY

Amul is one of India’s most iconic brands. It is 1^st and only organization in the world to get ISO 9000 standard for its farmer cooperatives. Today Amul collects 11 Lakhs liters of milk everyday. It has become world’s largest pouch milk brand. With $2 billion in revenue, the brand is as recognizable across India as Coca-Cola and recently Amul milk has entered overseas market such as Mauritius, UAE, USA, Oman, Bangladesh, Australia, China, Singapore, Hong Kong and other South African countries. Today Amul Dairy is no.1 in Asia and no.2 in the world which is a matter of proud for Gujarat and the whole of India.

DECLINE

Decline is the stage where product decline and dies.  Though Amul milk went through controversy of “mozzarella-like milk” it survived and did not let the product decline. Also hardly any other products of Amul has seen the decline stage and now whose production is stopped.

Consumer Behaviour and Buying Decisions

Successful marketing requires that companies fully connect with their customers.”Consumer Behaviour “is the study of how individuals, groups, and organizations select, buy, use and dispose of goods, services, ideas, or experiences to satisfy their needs and wants.

The starting point for understanding consumer behaviour is the stimulus-response model. Marketing and environmental stimuli enter the consumer’s consciousness and a set of psychological process combine with certain consumer characteristics to result in decision process and purchase decisions.

Four key psychological processes are motivation, perception,  learning and memory-fundamentally influence consumer responses.

In a country like India, milk is considered an important part of your diet .whether it is plain boiled milk or your favourite cutting chai, milk is an item every Indian drinks. This physiologically motivates our customer to find the need to buy milk. Amul is perceived as “the taste of India”, a brand which is trusted by millions of Indians when it comes to milk. Learning induces change in a consumer’s behaviour arising from experience. Amul has proved itself over the years to provide its customers with consistency in its products. Amul milk is known to be fresh and nutritious .Brand associations consist of all brand related thoughts, feelings, perceptions, images, attitudes, that become linked to the brand. Brands like Amul ( a brand which is a year older than independent India ) stirred patriotic feelings and much later of course summed up their brand as the Pride of India.

The buyer decision process is a five stage process which consumers go through from

Pre - purchase to post - purchase. These stages are need recognition, information search, evaluation of alternatives, purchase decision, and post-purchase behaviour.

Need recognition: with an internal stimulus one of the person’s normal needs-hunger, thirst, sex-rise to a threshold level and becomes a drive.

Need Recognition: Milk is a daily consumption item which satiates a consumers hunger .

Information: By gathering information, the consumers learn about competing brands. Because of the excellent products, the top of the mind positioning, the fantastic distribution and supply chain channels and finally the point of purchase branding and advertising of the Amul girl, Amul finds itself in a very strong position where its brand equity is concerned

Evaluation of alternative: Amul has a great competitive advantage over its competition brands Because of the large numbers of dairy suppliers; Amul has a tremendous strength and reliability in its supply chain. This makes it a very reliable brand in its consumer’s eyes. Not only its superior product quality, but also the fact that it is easily available in most regions makes it an Indian favourite brand.

Purchase decision: In the evaluation stage, the consumer’s preferences among the brand in the choice set and form an intention to buy the most preferred brand. In executing a purchase intention, the consumer may make up to five subdivisions:  brand, dealer, quantity timing and payment method.

In India milk happens to be majorly bought by the women in the family. Amul being a brand love by all, has formed a trusted milk brand image in the consumers mind. Like any FMCG company, Amul concentrates on breaking the bulk it has an efficient supply chain with distributors and retailers all throughout the country. Besides this, the company has exclusive Amul stores which sell all products of Amul brand. Thus, in the marketing strategy of Amul, distribution is strength of the brand. A consumer can buy milk any times of the day, through various outlets, in quantities they require. Milk is bought in all parts of the country; from every urban area to every small village. Amul is even a brand which is economically priced.

Post purchase behaviour: After purchase, the consumer might experience dissonance from noticing certain disquieting features. Marketing communications should supply beliefs and evaluations that re-in forces consumer’s choice and help him or her feel good about the brand.

Amul has had a record in content marketing for years. It is now becoming an example of customer service on social media. The brand has proved that it is actually using social media for listening to its customers and solving their queries on Face book. On tenth October,2014, a disgruntled customer posted pictures of Amul Gold milk. The images within the post were scary and portrayed a very negative image of the brand. Within 4 days, the brand had come out and explained itself on its Face book page. It alleviated the fears which was instilled in its customers and even gave detailed information which the consumer wanted. This restored the brands positive image and brand loyalty.

Product Mix

Product mix of Amul includes Milk, Bread Spreads, Cheese, Dahi, Ghee, Mithai, Ice-Cream,Paneer and Beverages.

The product line and product depth of Amul Milk is shown below.

Product line includes all the different types of  milk provided by Amul like Pouch milk, UHT Milk, flavored milk(Amul KOOL)

UHT MILK

(Available in different flavors)

POUCH MILK

(Available in different flavors)

                                               FLAVOURED MILK

                                       (Available in different flavors)

PRODUCT LINE AND PRODUCT DEPTH

POUCH MILK	UHT MILK	FLAVORED MILK(AMUL KOOL)
AMUL TAZA	AMUL GOLD	THANDAI
AMUL GOLD	AMUL TAAZA	CHOCOLATE
AMUL DIAMOND	AMUL CALCI	ELAICHI
AMUL CHAI MAZA	AMUL SLIM N TRIM	KESAR
AMUL SHAKTI	AMUL MOTI	ROSE
AMUL SHAKTI		BADAM
AMUL SLIM TRIM		AMUL KOOL CAFE
		AMUL KOOL KOKO
		STAMINA DRINK
		PRO DRINK

NEW PRODUCT DEVELOPMENT

Amul can introduce a small packaging sugar free sweetened milk

For health conscious people who usually travel long distances. It could be a direct mix for coffee and other protein powders.

 A lot of people prefer the taste of sweetened milk over plain milk but they don’t consume flavoured milk due to the calories attached to it so this product can be the best for them.