A REPORT ON

Exploring Opportunities for Amul Fresh Paneer in Anand and Vadodara City and also along NH8 Between Ahmedabad and Vadodara

By:Abhishek Sharda 10BSPHH010020

IBS Hyderabad

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A REPORT ON Exploring Opportunities for Amul Fresh Paneer in Anand and Vadodara City and also along NH8 Between Ahmedabad and Vadodara

Submitted By: Sharda Abhishek Hanumandas Enrolment no. 10BSPHH010020

Organization: Kaira District Co-operative Milk Producers Union Ltd. (Amul Dairy)

A report submitted in part fulfillment of the requirements of MBA program of IBS Hyderabad.

Distribution list:
Prof. D Sreenivasa Chary Faculty Guide IBS Hyderabad Dr. Gopal Shukla Sr Executive (Sales & Mktg) Amul Dairy

Date of submission: 15th April 2011

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AUTHORIZATION

This is to certify that this is a bonafide project report submitted in partial fulfillment of the requirements of MBA program of IBS.

This Report document titled Exploring opportunities for Amul Fresh Paneer in Anand and Vadodara City and also along the NH8 between Ahmedabad and Vadodara is a submission work done by Abhishek Sharda.

This report has been formally submitted to Prof. D Sreenivasa Chary, Faculty, IBS Hyderabad.

This report has been verified and authenticated by

Prof. D Sreenivasa Chary Faculty Guide IBS, Hyderabad

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ACKNOWLEDGEMENT
Let me begin by stating that undertaking this project was a great Learning experience and an academic stimulation for me. I certainly encountered difficulties at various stages of execution. Nonetheless, the sense of challenge and accomplishment that filled me after overcoming all the overwhelming odds is inexplicable in words. The unending guidance, motivation and co-operation that I received from various quarters are truly the factors that kept me going. With deep sense of Gratitude, I hereby take this opportunity to render my most sincere and heartiest thanks to all the people who helped me realize this project. First and foremost I would like to extend my gratitude to Mr. Rahul Kumar Srivastava, MD, Kaira District Co-operative Milk Producers Union Ltd. for providing me this excellent opportunity of working with the company and helping me gain the necessary Industrial exposure required for my MBA program at IBS, Hyderabad. I am greatly indebted to my Company Guide Dr Gopal G Shukla, Sr executive (Sales & Marketing) Kaira District Co-operative Milk Producers Union Ltd for giving me the opportunity to work on the project titled- Exploring opportunities for Amul Fresh Paneer in Anand and Vadodara City and also along the NH8 between Ahmedabad and Vadodara and sparing his valuable time for this project and guiding me throughout the entire duration it lasted. He literally inundated me with study material and was ever so receptive to my queries and doubts. Most of all, I extend my heartfelt thanks to our Faculty Guide, Prof. D Sreenivasa Chary, of IBS Hyderabad whose suggestions and constructive critics have been invaluable assets all throughout. I am overwhelmed by his level of involvement in my project and shall always be grateful to him for the same. His wisdom and commitment have been a great source of inspiration. Needless to say, had it not been for him, we wouldnt now be cherishing this exalted goal. He has shown us the way to pursue excellence. I would also like to thank Mr. Sanyam Pandya (Sr Sales and Marketing officer, Amul Dairy), Mr Madhubhai (Mohini Traders) and Mr. Nilesh Patel for supporting me and guiding me during the various phases of this project.

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And, last but not the least; let me not forget to thank all the Faculty of IBS Hyderabad who taught me during the first year and other staff members of Amul Dairy for encouraging and keeping my spirits high during the entire course of this project.

Abhishek Sharda IBS Hyderabad

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ABSTRACT
Paneer is the largest dairy product sold in terms of volume after liquid milk. This market has been estimated to be worth ` 10000 crores in both organized and unorganized sectors. But this market is highly dominated by the unorganized sector while the organized sector constitutes only 1% of the market. Amul being one of the largest Co-operative dairy has forayed into Fresh Paneer market since November 2007. But due to constant increase in prices of milk and high inflation, Amul has not been able to capture its targeted market share in this industry. The main objective of this project is to study the current market scenario and increase the sales of Fresh Paneer by creating appropriate promotion schemes. Firstly in order to study the current market scenario, an exploratory survey has been conducted in Anand and Vadodara city and along the NH8 between Ahmedabad and Vadodara. During this survey, answers to questions like the Market Share, Major Competitors, their Pricing and Promotion Strategies were found out. In the Next Step, market research was conducted on institutional buyers like Hotels and Caterers by means of a questionnaire. The objective of this research was to find out the factors that affect the buying behavior of these customers while buying Fresh Paneer from the market. Factor Analysis was done using SPSS tool and variables like shelf life, quality, price, brand, supply services etc. were grouped into 3 factors. Depending upon the results of factor analysis, appropriate recommendations were made to the company to concentrate first on the Basic Expectations like price, packaging, promotion schemes etc. Next the company should concentrate on Quality to improve the Brand Image and finally on Supply services that are provided to the customer. Another recommendation was to leave out the retailers for supply of Fresh Paneer because their demand is variable. Also the shelf life of the product is less, and we dont provide facility of replacement, it would be a burden on the retailers who will not be able to sell the product on time. There were some complaints regarding quality and supply of Fresh Paneer. These were resolved by doing competitors analysis and making necessary changes in the product. The problem regarding supply was solved by dividing the entire network among three distributors of the company. Finally samples were given to the customers for trial purpose and orders were taken. At the end of the internship, the expected market share to be captured by Amul Fresh Paneer is 47%.

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Table of Contents
AUTHORIZATION ........................................................................................................................................... 3 ACKNOWLEDGEMENT ................................................................................................................................... 4 ABSTRACT...................................................................................................................................................... 6 OVERVIEW..................................................................................................................................................... 9 Dairy Industry in India:-............................................................................................................................. 9 AMUL and Operation Flood:- .................................................................................................................... 9 AMUL BCG MATRIX ................................................................................................................................. 11 INTRODUCTION ........................................................................................................................................... 14 Purpose of the Report:- .......................................................................................................................... 14 Scope of the Report:- .............................................................................................................................. 14 Methodology and Data collection:- ........................................................................................................ 15 Phase1:- Exploratory Survey ............................................................................................................... 15 Phase2:- Finding out prospects by analysis of questionnaire ............................................................. 15 Phase3:- Creating a New Distribution Network .................................................................................. 16 Limitations:- ............................................................................................................................................ 17 MAIN TEXT .................................................................................................................................................. 18 AMUL forays into Fresh Paneer Market ................................................................................................. 18 Phase I: Exploratory Survey .................................................................................................................... 19 PORTERS FIVE FORCE ANALYSIS OF PANEER MARKET ............................................................................ 22 Phase II:- Questionnaire Survey .............................................................................................................. 24 OBJECTIVE OF STUDY .......................................................................................................................... 24 RESEARCH QUESTION ......................................................................................................................... 24 METHODOLOGY .................................................................................................................................. 24 FACTOR ANALYSIS ............................................................................................................................... 25 CORRELATION MATRIX........................................................................................................................ 26 KMO & BARTLETTS TEST .................................................................................................................... 28 COMMUNALITIES ................................................................................................................................ 29 TOTAL VARIANCE EXPLAINED ............................................................................................................. 30 COMPONENT MATRIX ......................................................................................................................... 31 ROTATED COMPONENT MATRIX ........................................................................................................ 32 COMPONENT TRANSFORMATION MATRIX......................................................................................... 33 Page 7

COMPONENT SCORE COEFFICIENT MATRIX ....................................................................................... 34 FINDINGS AND CONCLUSION OF FACTOR ANALYSIS .............................................................................. 35 RECCOMENDATIONS ON THE BASIS OF PHASE I & II .............................................................................. 36 PHASE III: Creating a new distribution network ..................................................................................... 37 PANEER MANUFACTURING PROCESS OF LOCAL DAIRIES .................................................. 38 PANEER MANUFACTURING PROCESS OF AMUL DAIRY ...................................................... 39 COMPARISON WITH COMPETITORS PRODUCTS ................................................................... 40 CREATION AND EXPANSION OF MARKET ............................................................................................... 42 MARKET EXPERIENCES ............................................................................................................................ 43 QUESTIONNAIRE ......................................................................................................................................... 44 REFERENCES ................................................................................................................................................ 46

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OVERVIEW
Dairy Industry in India:India is the worlds largest milk producer, accounting for more than 13% of the worlds total milk production. It is the worlds largest consumer of dairy products, consuming almost 100% of its own milk production. Dairy products are a major source of cheap and nutritious food to millions of people in India and the only acceptable source of animal protein for large vegetarian segment of Indian population, particularly among the landless, small and marginal farmers and women. Dairying has been considered as one of the activities aimed at alleviating the poverty and unemployment especially in the rural areas in the rain-fed and drought-prone regions. In India, about three-fourth of the population live in rural areas and about 38% of them are poor. In 19861987, 73% of rural households owned livestock. Small and marginal farmers account for three quarters of these households owning livestock, raising 56% of the bovine and 66% of the sheep population. According to the National Sample Survey of 1993-94, livestock sector produces regular employment to about 9.8 million persons in principal status and 8.6 million in subsidiary status, which constitutes about 5% of the total work force. The progress in this sector will result in a more balanced development of the rural economy.

AMUL and Operation Flood:AMUL means "priceless" in Sanskrit. The brand name "Amul," from the Sanskrit "Amoolya," was suggested by a quality control expert in Anand. Amul products have been in use in millions of homes since 1946. Amul Butter, Amul Milk Powder, Amul Ghee, Amulspray, Amul Cheese, Amul Chocolates, Amul Shrikhand, Amul Ice cream, Nutramul, Amul Milk and Amulya have made Amul a leading food brand in India. Currently Unions making up GCMMF have 2.9 million producer members with milk collection average of 9.10 million litres per day. (Turnover: Rs. 80.05 billion in 2009-10). Today Amul is a symbol of many things like 1) 2) 3) 4) 5) High-quality products at reasonable prices. The genesis of a vast co-operative network. The triumph of indigenous technology. The marketing savvy of a farmers' organisation. A proven model for dairy development.

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Amul based in Anand, Gujarat has been an example of a co-operative organization's success in the long term. The Amul Model has established itself as a uniquely appropriate model for rural development. The Amul Model is a three-tier cooperative structure. This structure consists of a Dairy Cooperative Society at the village level affiliated to a Milk Union at the District level which in turn is further federated into a Milk Federation at the State level. The above three-tier structure was set-up in order to delegate the various functions; milk collection is done at the Village Dairy Society, Milk Procurement & Processing at the District Milk Union and Milk & Milk Products Marketing at the State Milk Federation. This helps in eliminating not only internal competition but also ensuring that economies of scale are achieved. As the above structure was first evolved at Amul in Gujarat and thereafter replicated all over the country under the Operation Flood Programme, it is known as the Amul Model or Anand Pattern of Dairy Cooperatives. The dairy industry in India and particularly in the State of Gujarat looks very different today. India has emerged as the largest milk producing country in the World. Gujarat has emerged as the most successful State in terms of milk and milk product production through its cooperative dairy movement. The Kaira District Cooperative Milk Producers Union Limited, Anand has become the focal point of dairy development in the entire region and AMUL has emerged as one of the most recognized brands in India, ahead of many international brands. As an impact of the Amul Pattern it has been proved that an investment of Rs. 20 billion over 20 years under Operation Flood Programme in 70s & 80s has contributed in increase of Indias milk production by 40 Million Metric Tonne (MMT) i.e. from about 20 MMT in pre- Operation Flood period to more than 60 MMT at the end of Operation flood Programme. Thus, an incremental return of ` 400 billion annually have been generated by an investment of ` 20 billion over a period of 20 years. This has been the most beneficial project funded by the World Bank anywhere in the World. One can continue to see the effect of these efforts as Indias milk production continues to increase and now stands at 90 MMT. Despite this fourfold increase in milk production, there has not been drop in the prices of milk during the period and has continued to grow. Due to this movement, the countrys milk production tripled between the years 1971 to 1996. Similarly, the per capita milk consumption doubled from 111 gms per day in 1973 to 222 gms per day in 2000. Thus, these cooperatives have not just been instrumental in economic development of the rural society of India but it also has provided vital ingredient for improving health & nutritional requirement of the Indian society. Very few industries of India have such parallels of development encompassing such a large population.
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AMUL BCG MATRIX

Each product has its product life cycle and each stage in product's life-cycle represents a different profile of risk and return. In general, a company should maintain a balanced portfolio of products. Having a balanced product portfolio includes both high-growth products as well as lowgrowth products. A high-growth product is for example a new one that we are trying to get to some market. It takes some effort and resources to market it, to build distribution channels, and to build sales infrastructure, but it is a product that is expected to bring the gold in the future. On the other hand, a low-growth product is for example an established product known by the market. Characteristics of this product do not change much, customers know what they are getting, and the price does not change much either. This product has only limited budget for marketing. This is the milking cow that brings in the constant flow of cash.

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The BCG matrix helps us to find out what phase our product is in and how do we classify what we sell. It also helps us to assign the priorities in terms of promotion to the different products. Placing products in a BCG matrix results in 4 categories in product portfolio of a company:

Stars (High Market Share, High Growth)

Stars are units with a high market share in a fast-growing industry. The hope is that stars become the next cash cows. Sustaining the business unit's market leadership may require extra cash, but this is worthwhile if that's what it takes for the unit to remain a leader. When growth slows, stars become cash cows if they have been able to maintain their category leadership. For Amul, the following products are in the Star category:o o o o o o Amulya Milk powder Amul Ice-cream Amul Shrikhand Amul Frozen Paneer Amul Fresh Cream Amul Kool (flavoured milk)

Question Marks (Low Market Share, High Growth)

Question marks (also known as problem child) are growing rapidly and thus consume large amounts of cash, but because they have low market shares they do not generate much cash. The result is a large net cash consumption. A question mark has the potential to gain market share and become a star, and eventually a cash cow when the market growth slows. If the question mark does not succeed in becoming the market leader, then after perhaps years of cash consumption it will degenerate into a dog when the market growth declines. Question marks must be analyzed carefully in order to determine whether they are worth the investment required to grow market share. For Amul, the products in this category are:o Amul Frozen Pizza o Amul Chocolates o Amul Mithaimate

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Dogs (Low Market Share, Low Growth)

Dogs, or more charitably called pets, are units with low market share in a mature, slow-growing industry. These units typically "break even", generating barely enough cash to maintain the business's market share. Though owning a break-even unit provides the social benefit of providing jobs and possible synergies that assist other business units, from an accounting point of view such a unit is worthless, not generating cash for the company. They depress a profitable company's return on assets ratio, used by many investors to judge how well a company is being managed. Dogs, it is thought, should be sold off. For Amul, the product in this category is:o Amul Flaavyo yoghurt

Cash Cows (High Market Share, Low Growth)

Cash cows are units with high market share in a slow-growing industry. These units typically generate cash in excess of the amount of cash needed to maintain the business. They are regarded as staid and boring, in a "mature" market, and every corporation would be thrilled to own as many as possible. They are to be "milked" continuously with as little investment as possible, since such investment would be wasted in an industry with low growth. For Amul, the products in this category are:o o o o Amul Butter Amul Pure Ghee Amul Processed Cheese Amul Pasteurized Milk

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INTRODUCTION
Purpose of the Report:-

The main Purpose of this report is to explore opportunities for Amul Fresh Paneer in Anand and Vadodara city and also along NH8 between Ahmedabad and Vadodara.

Scope of the Report:The report mentions about the work done during the Summer Internship Program at KAIRA District Co-operative Milk Producers Union Ltd. also known as Amul Dairy. The report covers the work done during the internship program in three phases.

1. Conducting an exploratory survey in and around Anand and Vadodara city and also along the NH8 between Ahmedabad and Vadodara. 2. Finding out prospects by analysis of a questionnaire. 3. Creating a new distribution network and getting new institutions by marketing the product in the above stated area.

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Methodology and Data collection:Phase1:- Exploratory Survey Methodology:- In this phase an exploratory survey was conducted in and around Anand and Vadodara city and also along the NH8 between Ahmedabad and Vadodara. It was done by surveying the area and making a database that contained a list of Restaurants, Caterers, Retailers etc.

Data Collection:- During this phase, the following data was collected from the various people: Current brand of Paneer they use The current price at which they buy Paneer The current demand of the firm

Phase2:- Finding out prospects by analysis of questionnaire Methodology:- In this phase a survey was conducted on people to find out their buying behavior while purchasing Paneer. Factor analysis was done on the data collected by means of SPSS tool. Analysis of data indicated the factors that affect the peoples buying behavior while purchasing Paneer from the market. As per the result of factor analysis, appropriate factors would be targeted during the third phase to increase the sales of Fresh Paneer.

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 Data collection:questionnaire.

Primary data was collected by means of a

Variables like price, shelf life, promotion schemes, packaging, quality, brand, supply services were identified by means of a sample questionnaire and conducting focus group interviews. Primary data was collected on the above variables by circulating the questionnaire.

Phase3:- Creating a New Distribution Network Methodology:- In this final Phase of the project, as the factors that affect the peoples buying behavior of Paneer are already known, we will be concentrating on those factors more importantly in order to convert prospects into our potential customers. Meetings with the prospects will take place in presence of the distributor and deals will be finalized. Also the needs of the customer will be asked about the supply services required etc.

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Limitations: NH8 being a part of my route, it was a difficult task to cover the stretch of around 100 kms on a bike that too in hot summer of Gujarat. Since it is a market research project many respondent errors like non response error, refusal, response bias etc. were also faced. During the study of the first phase, it was found that the market was dominated by local players; hence it will be a difficult task to break this clutter. As per the survey conducted, it was found that Amul Paneer had some quality issues, i.e. it didnt fulfill the consumers needs. Also Paneer being a perishable item, logistics is a matter of concern as the product needs to be kept in refrigerated environment, the cost increases.

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MAIN TEXT
AMUL forays into Fresh Paneer Market
On November 27th 2007, Amul decided to venture into the Fresh Paneer market which was estimated to be worth ` 10,000 crores both in organized and unorganized segments. At that point of time, the market was highly dominated by unorganized segment with the organized players accounting only 1% of the total market share. Also the organized players were regional. Amul being a market leader in frozen paneer segment with 65% market share, this was a step towards becoming the numero-uno brand in Paneer Market in India. In terms of volume, the Indian Paneer market is estimated to be around one lakh metric tonnes per annum, 80% of which is sold as loose Paneer by local milk vendors. It is the largest dairy product sold in terms of volume after liquid milk. The Paneer Market in India is divided into two major segments i.e. Consumers and Institutions. The Institutional segment contributes to over 80% of the total Paneer market. However this segment is highly price sensitive. Amul has an excellent milk distribution network which covered 1 lakh retail outlets across the country. So Amul decided to leverage on this and launch its Paneer through the existing milk distribution network in Ahmedabad. The product was priced to be around ` 25 for 200gm block and ` 115 for a 1kg block. But due to high inflation and rising prices of basic commodities, this price kept on increasing which lead to a loss in the market share. Hence people again moved back to local dairies which were offering Paneer at a lower price than Amul.

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Phase I: Exploratory Survey

An Exploratory survey was first conducted in and around the cities of Anand and Vadodara and also along the NH8 between Ahmedabad and Vadodara. The main purpose of this survey was to create a database which contains important information like the list of Hotels, Caterers and other bulk buyers of Paneer, their owners, contact information, the current brand of paneer they use, at what price they buy Paneer and the daily demand of Fresh Paneer. This database would be of high importance to the company as they can use this information to target these consumers for other products they introduce at later stages. Also from this database, we would be targeting the prospects with proper promotional schemes in the later phases. The current market scenario of Fresh Paneer Market in Anand, Vadodara and NH8 between Ahmedabad and Vadodara is shown below:

Market Share in Surveyed Area

Sugam 13% Amul 20% local 67%

It was also found that the current demand of Restaurants in cities was around 5 kg a day while that on highways was around 2-3 kg a day. Also the demand for caterers was variable according to the party seasons. Moreover the retailers preferred frozen paneer over fresh paneer because the shelf life of fresh paneer was around 6-8 days while that of frozen paneer was around 180 days. Since the demand from retailers is variable, it wasnt a good idea to market the product to retailers. Another observation was about the pricing of the paneer. The pricing of fresh paneer was variable between ` 135 per kg to ` 200 per kg in the unorganized sector. Some of the information collected is as follows

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Demand:- Variable from 25-50 Kgs Current Rate:- Rs. 175/kg Current Brand:- Amul Complaint:- No Replacement, Supply Issues

Demand:- 5 kg/day Current Rate:- Rs. 180/kg Current Brand:- Local Complaint:- Constant rising prices

Demand:- 7 kg/day
Current Rate:- Rs. 170/kg Current Brand:- Local Complaint:- nil Demand:- 6 kg/ day Current Rate:- Rs. 178/kg Current Brand:- Sugam

Complaint:- None

Demand:- 7-8 kg / day Current Rate:- Rs. 135/kg Current Brand:- Local Complaint:- Supply Issues

Demand:- 4-5 kg / day (12 Kg on weekends) Current Rate:- Makes own paneer Current Brand:- Own Paneer Complaint:- Supply Issues

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Demand:- 4-5 kg / day (variable with party orders)

Current Rate:- Rs. 178/kg

Current Brand:- Sugam Complaint:- None Demand:- 14 kgs/ Day Current Rate:- Rs. 200 /kg Current Brand:- Local Complaint:- None

Demand:- 8-10 kgs / day Current Rate:- Rs. 180/kg Current Brand:- local + Amul Complaint:- Supply Issues Demand:- 8 kgs / day

Current Rate:- Rs. 178/kg

Current Brand:- Local Complaint:- Supply Issues

Demand:- 2-3 Kgs /day (Variable with party orders) Current Rate:- Rs. 160/kg Current Brand:- Local Complaint:- None

Demand:- 10 kgs / day

Current Rate:- Rs. 175/kg Current Brand:- Sugam Complaint:- Supply Issues
To understand the market in a better way, we did the porters five force analysis.
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PORTERS FIVE FORCE ANALYSIS OF PANEER MARKET

BARRIER OF NEW ENTRY High capital investment required in initial years. Legal Barriers as it is a processed food industry. Intense competition from the unorganized sector. Economies of scale (high for Amul) but very difficult for new players to achieve.

DEGREE OF RIVALARY Large number of players from the unorganized sector. High Exit Barriers Due to high investment made for mass production of fresh paneer. Highly price sensitive. DEGREE OF RIVALARY IS HIGH

BARRIER TO THE ENTRY IS HIGH

BARGAINING POWER OF SUPPLIER It is Prone to Seasonal Fluctuations. Also Amul having a cooperative network of suppliers, this is not an issue for Amul.

BARGAINING POWER OF THE SUPPLIER IS LOW.

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THREATS OF SUBSTITUTE Soya bean is the only substitute found to paneer. But still Soyabean cannot replace paneer as their uses are very different. THREATS OF SUBSTITUTE IS LOW

BARGAINING POWER OF BUYERS Availability of wide variety of choices from local unorganized players. Consumers being price sensitive, they might buy a product just because it is offered at lower price. BARGAINING POWER IS OF BUYER IS HIGH.

OVERALL CONCLUSION OF INDUSTRY THE INDUSTRY IS ATTRACTIVE ACCORDING TO PORTER ANALYSIS.

Also Amul has a vast Experience in Dairy industry and a large loyal customer base. Hence it wont be a problem to capture the market. Another positive point for Amul is the well established cooperative supply and distribution channel.

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Phase II:- Questionnaire Survey

As we observed above that due to high inflation and constant rise in prices of milk, the price of Paneer also kept on increasing which resulted in loss of market for Amul Fresh Paneer. The local dairies were also affected but not to that extent. In order to find out the exact scenario of the market, I decided to conduct a questionnaire survey to find out the buying behavior of consumers while buying fresh Paneer from the market.

OBJECTIVE OF STUDY
The objective of my study through this project is to determine the factors which have a bearing on consumers buying behavior of Fresh Paneer. The results obtained from this study will give us an insight into consumer behavior which, in turn, will help me in analyzing the factors contributing to brand preferences.

RESEARCH QUESTION
To analyze the consumers buying behavior of Fresh Paneer.

METHODOLOGY
I used factor analysis to identify the factors that influence the buying behavior of the consumers.

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FACTOR ANALYSIS
Factor analysis as done through SPSS 13.0 for Windows, gives us a detailed insight regarding the data that we have and its effects/results, etc, on the study. With factor analysis we would be able to adjudge our results much accurately and would be able to take decisions efficiently. It helps to group the variables together that have some similarity into a factor giving the general idea about all the variables in it. This helps us to know which factor to work on for improving the performance of the organization. It also helps us to include any new variables that emerge according to their similarity with the others in the group. Not only does factor analysis help in interpreting questionnaires, it also helps in formulation of better questionnaires after careful study of the variables intended for implementation in the questionnaire and the factors generated thereof. In this study we run the factor analysis for the data obtained through questionnaires and we look forward to find convincing patterns/results from the same through interpretation of the various analysis tools obtained from the factor analysis output.

The Variables that we have chosen are: Price Packaging Quality Brand Supply Services Shelf Life Promotion Schemes Daily Demand

As the number of factors influencing buying behavior is large, factor analysis would aid us in determining the most influential factors and we will be able to group the variables into factors.

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CORRELATION MATRIX
The correlation matrix gives the correlation coefficients between one variable and every other variable. It shows the extent to which each variable can have some similarity to others if any. If there is significant correlation between any two variables, we may choose to drop one of them as a variable and simplify further analysis of our data. This is done because both the variables give the same information and hence result in redundancy. Typically a correlation of 0.9 is considered to be high. If the correlation is low then also we can drop the variables as they dont provide us with much information and can be dropped. In our output the maximum correlation we are getting is between variables Brand and Quality which is 0.718 which is high enough. But still it is not formidable to consider reducing one of the variables of the two, as correlation value is less than 0.8. On the other hand it also shows that the variables chosen for our questionnaire are discrete with minimum or no redundancy. A very low correlation between the variables thus shows that the questions that were asked in our questionnaire are apt and they convey the correct, discrete message as far their proposition is concerned. Therefore we assume that our data is free from singularity. The value of the determinant is 0.016 which is greater than the necessary value of 0.00001; hence multicollinearity is not a problem.

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KMO & BARTLETTS TEST

Our analysis shows us a KMO statistic of 0.669. It signifies that our data size is adequate enough for factor analysis with respect to the number of variables selected. A KMO value greater than 0.8 is normally considered great for factor analysis, but since our endeavor regarding finding out the buying behavior of Fresh Paneer depends upon the questions that were asked and assessed for, we infer that though the data seem to be unfit for a perfect factor analysis, it would definitely help us in zeroing into relevant factors that govern the analysis. Bartletts measure tests the null hypothesis that the original correlation matrix is an identity matrix. For factor analysis to work we need some relationships between variables and if the Rmatrix were an identity matrix then all correlation coefficients would be zero. Therefore we want this test to be significant (to have a significant value less than 0.05).A significant test tells us that R-matrix is not an identity matrix; therefore, there are some relationships between the variables we hope to include in the analysis. For this data, Bartletts test is highly significant (p<0.001) and therefore factor analysis is appropriate.

KMO and Bartlett's Test Kaiser-Meyer-Olkin Measure of Sampling Adequacy. Bartlett's Test of Sphericity Approx. Chi-Square df Sig.

0.669 325.514 36 0.000

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COMMUNALITIES
Component analysis works on the assumption that all variance is common, therefore, before extraction the communalities are all 1. The extraction reflects the common variance in the data structure. For example we can say that 66.1% of the variance associated with price is common or shared variance. Another way to look at the communalities is in terms of the proportion of variance explained by the underlying factors. It gives the extent to which the variance has been accounted for by the extracted factors.

Communalities Business Price Packaging Quality Brand Supply Services Shelf Life Promotion Schemes Daily Demand Extraction Method: Principal Component Analysis. Initial 1.000 1.000 1.000 1.000 1.000 1.000 1.000 1.000 1.000 Extraction 0.652 0.661 0.831 0.848 0.790 0.692 0.765 0.757 0.586

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TOTAL VARIANCE EXPLAINED

Our output lists the eigen values associated with each linear component after extraction and after rotation. Before extraction SPSS has identified 9 components within the data set as we know that at first SPSS will show us as many components (factors) as the number of variables. The eigen values associated with each factor represent the variance explained by that particular linear component. On the other hand it explains the extent of coverage of the critical factors included in the analysis. The first factor has the highest significance as it explains 36.353% of the total variance.

Component 1 2 3 4 5 6 7 8 9

Total 3.272 2.047 1.263 0.710 0.653 0.381 0.302 0.193 0.178

Total Variance Explained Extraction Sums of Squared Initial Eigenvalues Loadings % of Cumulative % of Cumulative Variance % Total Variance % 36.353 36.353 3.272 36.353 36.353 22.747 59.100 2.047 22.747 59.100 14.035 73.135 1.263 14.035 73.135 7.891 81.026 7.260 88.286 4.235 92.521 3.354 95.875 2.145 98.020 1.980 100.000

Rotation Sums of Squared Loadings % of Cumulative Total Variance % 2.870 31.885 31.885 1.929 21.434 53.318 1.784 19.817 73.135

Extraction Method: Principal Component Analysis.

Since we are extracting factors with Eigen values greater than 1, we get 3 components (factors) as our final factors. If we extract factors with Eigen values less than 1 then we will get factors which are less significant and explanatory than the variables themselves. After extraction we take up the 3 factors thus generated and discard the others. We cannot simply jump to results without the rotation. With rotation we try to optimize the factor structure and hence equalize the relative importance of all the factors with respect to the final output.

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COMPONENT MATRIX
It contains the loadings of each variable onto the factors generated. It shows us the variables that have been best explained by the respective components. This matrix only shows the relative extraction of the variables into the components thus obtained. It is therefore not an useful tool for analysis but shows us the data required for further interpretation regarding the strength of the components. From our output we can see that the extraction values for component 1 is maximum compared to others and thus it explains the maximum variance. We cannot jump to the result about the various factors just by this matrix. A clearer picture is provided by the rotated component matrix.

Component Matrix(a) Component Business Price Packaging Quality Brand Supply Services Shelf Life Promotion Schemes Daily Demand Extraction Method: Principal Component Analysis. a. 3 components extracted. 1 -0.151 0.312 0.796 0.708 0.596 0.519 0.848 0.814 -0.097 2 0.686 0.546 0.421 -0.411 -0.453 -0.330 0.191 0.291 0.704 3 0.397 -0.516 0.141 0.421 0.479 -0.560 -0.092 -0.096 0.285

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ROTATED COMPONENT MATRIX

This matrix contains the same information as that explained by the COMPONENT MATRIX earlier above, except for the fact that this matrix shows us the result after rotation. Rotation maximizes the loadings of a variable in one particular factor while minimizing the loadings in all other factors. ROTATED COMPONENT MATRIX is used to interpret the loading of variables onto the respective factor that explains it in the best possible way

Rotated Component Matrix(a) Component Business Price Packaging Quality Brand Supply Services Shelf Life Promotion Schemes Daily Demand Extraction Method: Principal Component Analysis. Rotation Method: Varimax with Kaiser Normalization. a. Rotation converged in 6 iterations. 1 0.090 0.652 0.833 0.297 0.168 0.430 0.830 0.850 0.173 2 -0.118 -0.485 0.288 0.851 0.859 0.008 0.256 0.188 -0.182 3 0.794 0.008 0.232 -0.187 -0.156 -0.712 -0.098 -0.019 0.723

There are 3 factors and the variables load highly onto only one factor. The result of our output regarding the same can be interpreted as follows:

The first factor consists of Price, Packaging, Shelf Life and Promotion Schemes. The second factor consists of Quality and Brand. The third factor consists of Business/occupation and Supply Services.

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COMPONENT TRANSFORMATION MATRIX

It shows the relation between the factors before and after rotation. It is a measure of how much the factors have changed or how much they have remained the same. If the correlation is above 0.5, it shows that the concerned factor has more or less remained the same after rotation. But if the correlation is negative or below 0.5, it shows that the factors have changed considerably after rotation. Not only does it show the variation in one particular factor, it can also be used to see the correlation between the factors too.

Component Transformation Matrix Component 1 2 3 Extraction Method: Principal Component Analysis. Rotation Method: Varimax with Kaiser Normalization. 1 0.845 0.467 -0.259 2 0.490 -0.484 0.725 3 -0.213 0.740 0.638

From our output it is evident that Factors have changed considerably as correlation between component 1 & 3 is -0.259, between 1 & 2 is 0.467. But for some components the correlation is >0.5 so it remains the same.

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COMPONENT SCORE COEFFICIENT MATRIX

This matrix shows the coefficients of the variables in the equation that is made for all the factors when the factor analysis is done. These values are used to calculate the factor value for each of the individual sample.

Component Score Coefficient Matrix Component Business Price Packaging Quality Brand Supply Services Shelf Life Promotion Schemes Daily Demand Extraction Method: Principal Component Analysis. Rotation Method: Varimax with Kaiser Normalization. 1 0.036 0.311 0.273 0.003 -0.048 0.174 0.282 0.297 0.077 2 0.043 -0.378 0.100 0.445 0.472 -0.166 0.029 -0.002 -0.018 3 0.459 -0.084 0.172 0.018 0.040 -0.436 -0.033 0.004 0.405

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FINDINGS AND CONCLUSION OF FACTOR ANALYSIS

From the above analytical figures we have come to reduce our data comprising of 9 variables into broadly 3 factors. The factors or the components thus obtained from our analysis contain one or the other variables in them. With this outcome we would be able to group all the variables under consideration into discrete factors.

The first factor consists of Price, Packaging, Shelf Life and Promotion Schemes. The second factor consists of Quality and Brand. The third factor consists of Business/occupation, Daily Demand and Supply Services.

So now we can concentrate on the broader terms rather than individually focusing on the variables. This can be of great help to better understand the consumer buying behavior of Fresh Paneer.

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RECCOMENDATIONS ON THE BASIS OF PHASE I & II

The company should only focus on selling the Fresh Paneer to Restaurants and Caterers i.e. the institutional buyers. Retailers should not be considered for selling Fresh Paneer because the demand is very uncertain for the retailers. Also the shelf life of the product is less (about 6 to 8 days), and we dont provide facility of replacement, it will be a burden on the retailers who will not be able to sell the product on time. Also our findings give us the following 3 factors affecting the consumer buying behavior of laptops in India.

1. Basic Expectation: Price, Packaging, Shelf Life and Promotion Schemes. 2. Brand Image: Quality and Brand. 3. Operational Factor: Business/occupation and Supply Services.

The company needs to focus on these 3 factors in order to make the product run successfully in the market. The company needs to focus on Basic Expectation the most as it was the 1st factor that emerged out. This is considered most important by the survey respondents. In order to give initial boost to sales, the company should try to match the price that prevails in the current market and also come up with different unique promotion schemes. As it is said that first impression is the last impression, the packaging should be made attractive so that the customers are pulled towards it. Also it was seen that shelf life plays an important role in this factor, hence appropriate action should be taken for this. Then the next focus should be on improving the Brand Image by improving the quality. While the initial survey was being conducted, it was seen that Amul Fresh Paneer did not stand at par with competitors quality. The same was reported to the plant and hence some tests on the competitors product are currently being conducted. The 3rd factor is Operational factor which means that since our target prospects are Bulk buyers like caterers and restaurants, regular and timely supply services should be available. Hence the company needs to build a strong supply network for Fresh Paneer.

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PHASE III: Creating a new distribution network

During the Exploratory Survey (PHASE I) different were issues raised by the customers regarding Amul Paneer:1. Some believed that the Paneer was very hard and could not be used as per desire 2. Paneer was brittle i.e. it broke into small pieces while grating it 3. There was problem with the surface finishing of the paneer. 4. There were problems with supply of Paneer 5. Some had problems with the No Replacement Policy of Amul 6. Some had issues that their complaints were not heard by the Dairy Personal Hence it was important to resolve these problems before we go into the market and sell the product. So first we decided to study the paneer manufacturing process of Local dairy and compare it with the manufacturing process of Amul Fresh Paneer. This is to be done because the market is highly dominated by local players. So in order to understand where our product lags behind, we do this comparison.

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PANEER MANUFACTURING PROCESS OF LOCAL DAIRIES

The Paneer manufacturing process of Local dairies is simple. No hitech machines are used in the process. The milk got is stored in crates first at a cool temperature. Then the milk is heated at 180C for 2 to 3 hours. This is dont to get more solid part from the milk. This milk is then treated with lemon juice or lemon flower water in the milk reactor. This is done to convert the milk into solid particles. After this process, the semisolid mass is taken to filter press where the solid is seperated from the whey and then this solidpart is pressed by heavy machines to convert it into Paneer. After the pressing is done the product is cooled down and stored in a cool place. Each process is completely handeled under supervision of a person. Hence the manpower required for this type of manufacturing is more. Also the capacity of production is less as compared to Amul.

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PANEER MANUFACTURING PROCESS OF AMUL DAIRY

The Paneer manufacturing process of Amul is fully automatic. Amul has machinery imported from Denmark which handles the entire process of manufacturing of Paneer. Firstly the Milk brought in from different villages is stored in the milk storage tank (milk silos). From the milk silos, the milk is brought to the pasteurizer where it is heated at 90C to get more solid part from the milk. After pasteurization, the milk is taken to the coagulation tank and is treated with 1% citric acid for 5 minutes at 70C. The capacity of the coagulation tank is 10000 Kg but it is only half filled so that there is more space to churn the milk in the tank. After that the milk is taken to a cooling tank where the solid particles are allowed to settle down. At this point of time, the milk is divided into two parts curd and whey. This is then taken to the filling and pressing unit (UFP) where the separation of curd and whey takes place. Also in this unit the solid particles are cut into 2 kg blocks and then a pressure of about 1.5 bar is applied on it for 15 seconds in order to get proper blocks of Paneer. This Paneer is taken to the cutting and packaging unit where it is cut into blocks of 1 kg and vacuum packed. This packed Paneer is then stored in the blast unit for 2 to 5 hours at a temperature of 0 to -5 C before it is sent out in the market. Hence the process of manufacturing of Amul Fresh Paneer is standardized. The plant in Khatraj (Gujarat) has a capacity of producing 750 Kgs of Paneer per Hour. Also as compared to local dairies, less manpower per process is required.

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COMPARISON WITH COMPETITORS PRODUCTS

As stated earlier, there were some problems related to the quality of Amul Paneer that were given by the customers during the first two phases. There was a need to find out where does Amul lag behind in terms of quality. So in order to overcome these problems, we decided to do chemical analysis of Competitors Product and compare it with the results of Amul Fresh Paneer. Hence we got samples of Paneer from Sugam Dairy (Baroda), Sabar Dairy (Himmatnagar) and Modern Dairy (Pune) and did a chemical analysis of these samples. The results are shown in the table below:-

TESTS MOISTURE % FAT % PH

AMUL 49.46 54.40 5.65

SUGAM 46.08 62.12 5.69

MODERN 62.32 45.11 4.98

SABAR 58.32 24.5 5.63

1. MOISTURE: The moisture level is an indicator of the percentage of water content in the Paneer. It helps to make the Paneer soft and usable. But high level of moisture is damaging. It decreases the shelf life of Paneer. As per the analysis done at the testing lab of Amul, Modern dairy (Pune) had the highest moisture level of 62.32%, followed by Sabar dairy (Himmatnagar). Amuls Moisture level was around 49.46% while that of Sugam was around 46.08%. 2. FAT: The Fat percentage here indicates the Fat on Dry Basis. This test is done by removing the moisture completely from Paneer and then testing the amount of fat present in the solid part left. It is a measure of quality of the Paneer. According to the PFA Std. the min Fat% dmb i.e. fat on dry basis should be 50. As shown in table, we can see that Sugam dairy (Vadodara) gives the highest percentage of fat 62.12% where as Amul gives it around 54.4%. On the other hand, the fat content of Modern Dairy (Pune) and Sabar Dairy (Himmatnagar) were way below the PFA std. 3. PH: The Ph is just the indication of concentration of Hydronium ions in the Water. It is an indication of whether the product is suitable for consumption or not. All dairies gave nearly same Ph values.

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There was a problem with surface finishing of Amuls fresh Paneer. The surface was a bit rough and smooth finishing of Paneer was not got as compared to other Dairies. Also the packaging was different compared to the other dairies.

As a result of this analysis, Amul decided to make changes in the product. This was necessary as Amul was not having a bigger market share as compared to the competitors. So in order to get orders, Amul needed to have a product that is above the standards of the current competitors products. Hence changes were made and the chemical analysis showed the following results for Amul Fresh Paneer:

TESTS MOISTURE % FAT % PH

AMUL Before 49.46 54.40 5.65

AMUL After 61.30 51.67 6

Hence in order to correct the problem of hardness and Surface finishing, Amul increased the moisture level to 61.30% from 49.46%. This was done keeping in mind that there is no change in the shelf life of the product that is up to 8 days. There was a slight reduction in the Fat% in order to get the desired product. Also the Ph value increased to 6 which showed positive signs of improvement. Also I order to get rid of the Supply problems; we had a meeting with three distributors and divided the route among them. On some routes we needed to create a new market whereas in some we needed to expand the market.

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CREATION AND EXPANSION OF MARKET

After the changes were made in the contents of Amul Paneer, it was our task to create and expand the market of Amul Fresh Paneer. A study of the market was already done in the first phase. So it was our task to come up with the right schemes so that the product is able to capture the market as early as possible. Pricing: Since we were going to concentrate only on the institutional segment, which is a very price sensitive segment, it was necessary that we come up with the right pricing. Since the price of fresh Paneer prevailing in the market was in the range of Rs.135Rs.200 per kg, we decided to give it at Rs.175-180 per kg. This price also included the distributors margin.

Packaging: This came up as an important variable in the factor analysis that was done in Phase II. This variable lied in the factor of basic needs. Unlike other dairies, Amul decided to use transparent packaging for Amul Fresh Paneer. Sugam used vacuum sealed packaging for its Paneer whereas Modern Dairy used normal packaging.

Promotion: we had decided to give 4 % rebate to the institution who gives us regular bulk orders of Fresh Paneer, but this scheme was taken back. Also another Promotion scheme of co-branding was suggested to Amul Dairy. According to this scheme, we would have Menu Cards of Hotels which would have a note below saying You can trust on our Quality as we use Amul Products here. This scheme will take time to implement in the market though. ]

Also many customers faced problems while using the Paneer as they did not know the procedure to use Amul Paneer. The restaurant chefs used to directly use the Paneer taken out from the refrigerator. But that is not the right procedure. So it was our task to educate them that before using the Paneer, they need to soak it in lukewarm water for about 5-10 minutes. This helps the Amul Paneer to regain its moisture.

With the above schemes we were confident that we would be able to get some orders from the market and expand the market share for Amul in the Fresh Paneer Market.

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MARKET EXPERIENCES
1. We had a distributor from Indore (Madhya Pradesh) come in for a visit to Amul Dairy. He had a good network established in Indore and supplied to all leading Hotels and Caterers at a regular basis. He was supplying Paneer from Modern Dairy (Pune) to all his clients. He wanted to use Amul Paneer but wasnt getting the supply of it regularly. He had a daily demand of about 400 kg and wanted regular supply. We struck the deal and it was our first success with the product. 2. Next we went to Hotels and Caterers of Anand. We got a positive response from them about the product. We gave them the price and assured them regular supply. We gave them the number of the distributor who was going to supply to Anand. But we didnt receive any orders instantly. So we decided that we would distribute the samples of Amul Fresh Paneer when we go to the Customers to finalize the deal. We got Samples of 100 grams packed in packets and we took it along with the 1 kg block that we would supply to them.
3. We revisited the Anand Market and distributed the100 gram samples. Same was done in Vadodara and NH8 as well. As per the current response that we have got, we expect the Market share graph to look like the one given below after the end of Phase III. But we Expect the Market share to increase drastically in the coming years.

Expected Market Share of Surveyed Area After Phase III

Sugam 13% local 47% Amul 40%

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QUESTIONNAIRE
1) Occupation : Retailer Caterer

Restaurant

2) Do You Use Amul Products a) Yes b) No 3) If yes, Which of the following products do you currently use a) Milk b) Butter c) Cheese d) Ghee e) Paneer f) Cream g) Ice cream h) Others as well 4) Scale the following features taken into consideration while buying Paneer.

Most Important Price

Somewhat Important

Neutral

Less Important

Not Important

Packaging

Quality

Brand

Supply Services

Shelf Life

Promotion Schemes Page 44

5) What is your daily demand of paneer? a) 0-5kg b) 5-10kg c) 10-15 kg d) 15 and above ____________

6) What price do you buy paneer? a) 130-145 b) 145-160 c) 160-180 d) 180 and above ____________

7)

You purchase Paneer on a) Credit b) cash

8) Have you faced any problems while using Amul Paneer? a) Yes b) No

9) If Yes, Please write your complaints/ comments here

Name: ____________________________

Contact number:______________________

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REFERENCES

Business Research Methods by William G Zigmund Maketing Management by Philip Kotler www.statisticshell.com
http://www.nabard.org/fileupload/DataBank/TechnicalDigest/ContentEnglish/issue9td-6.pdf http://en.wikipedia.org/wiki/Amul http://www.amul.com/products.html

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