EXECUTIVE SUMMARY

Distribution is all about getting your product/service to right people at the

right time with special consideration for profit and effectiveness successful marketing

does not end when a business has developed a product/service and has found its

appreciate target audience with a view to selling it at the right price

Small business need to acknowledge the different typesof distribution

channels to utilize sales potential after reading the article you may learn that you

could increase sales or profit by using a different distribution channel to the one that

you currently use.

Distribution channels are influenced largely by the type and size of the

business and so some of the channels explained may not be feasible for your

particular business consequently you may the note that these channels could be

adopted in the future to accommodate for any change and to help your business grow.

Milk is only natural product that is daily used by man at regular intervals for

different purposes the national potential is ideal in quality and balanced to satisfy

human amino acid requirements the content of vitamins and minerals are unique not

only in proportion by in quality nutrients that are essential for mans growth and

development. Milk is the only article of food that fairly represents a complete diet,

and is the cheapest source of animal protein thus milk became the part of Indian food

1

MEANING / DEFINITION

Marketing has been for a long time a neglected area in India, because of

protective controls and prevalence of a seller’s market in most products. However, the

new trends as the government levels of fearing controls is bound to result in

increasing competition and a change over in many more products to a buyer’s market.

Marketing is the business function that identifies unfulfilled needs and wants

defined and measures their magnitude, determines which target markets the

organization can best serve, besides an appropriate products, services and programs to

serve these markets and calls up on everyone in the organization to “think and serve

the customer” from as a social point of view, marketing is the force, that harness a

nations industrial capacities to meet the society’s material wants.

William David observed “while great devices are invented in the laboratory,

great products are invented in the marketing departments.”

“A market consists of all the potential customers sharing a particular need or

want who might be willing and able to engage in exchange to satisfy that need or

want.”

Thus the size of the market depends up in the number of persons who exhibit

the need have resources that interest others, and are willing to offer these resources in

exchange for what they want.

DEFINITION OF MARKETING

“Marketing is a social and managerial process by which individuals groups

obtain what they need and they want through creating, offering and exchanging

products of value with others”.

“The marketing concept is a point of view on the business. It enunciates that

any business is essentially a “need satisfying process”. It also enunciates that all the

goals of the organization integrated management action and generation of consumer

satisfaction”.

----Caniff-----

2

“The aim of marketing is to make selling superfluous. The aim is to know and

understanding the customer as well as that the product or services fits….and sees

itself”.

----P.F Drucker----

“Marketing is the total system of business activities designed to plan, price,

promote and distributing want- satisfying products to target markets to achieve

organizational objectives”.

MARKETING MANAGEMENT

“Marketing management is the process of planning and executing the

conception. Pricing, Promotion and distribution of ideas, goods and services to create

exchanges that satisfy individual and organizational objectives”.

DISTRIBUTION

A major focus of channels of distribution is delivery. It is only through

distribution that public and private goods and services can be made available for use

of consumption the distribution channel over comes the time place and possession

gaps that separate goods services from those who need of want them.

3

NEED FOR THE STUDY

Model diary has a very important image of supplying good quality of milk at

reasonable price to the consumer. It has a hugged turn over and profited and some

other reasons gave birth too many private diaries as Model Diary occupies a very

important place in our state. The purpose of production is served only if the consumer

interests are attended to quality of the service rendered by Model Diary ensures the

organization regarding customer satisfaction in their product the aim of this study is to

provide an insight into the characteristics of the consumer markets indentify the

possible source dissatisfactions work towards handing complaints from consumer

which in turn help in enhancing customer satisfaction and prevent dissatisfaction .

Keeping in the view the private diaries in Krishna district milk market a

through a study of various factors include process quality availability packaging taste

usage time and so on distribution is the process of moving products from the producer

to the consumer which may involve several steps and the participations of multiple

companies as noted distribution channels often require the assistance of the others in

order for the marketer to reach its target market .Distribution channels are influenced

largely by the type and size of the business and so some of the channels explained

may not be feasible for your particular business consequently you may the note that

these channels could be adopted in the future to accommodate for any change and to

help your business grow .

4

SCOPE OF THE STUDY

Every manufacturer or marketer must aim at ultimate satisfaction of

consumers in order to ensure future survival and profitability in this context, the

factors influencing the purchase process such as quality price responsibility towards

complaints should be studied in depth in order to gauge the extent which each of these

factors affects a consumer is met is indicated by post-purchase behavior of the

consumer the post-purchase stage determines whether the customer remains loyal or

turns disloyal to brand or product purchased if his expectations of the product are in

conformity with its performance, then there is ultimate satisfaction of customer and he

remains loyal to the product. On the hand, if there are any discrepancies between the

performance of the product and his expectations then there is bound to be in

dissatisfaction and dissonance this dissatisfaction would lead to disastrous

consequences to the marketer as he would not only lose out on the dissatisfied

customer but would also have to face the worth of negative word of mouth publicity

5

OBJECTIVES OF THE STUDY

To study the customer satisfaction levels with respects to availability of model

dairy products.

To study the different type of distribution channels used by the company to

meet the Expectations of customers and their needs

To understand the criteria of selection of agents in model diary

To measure the effectiveness of distribution channels of model diary achieving

overall objectives.

To evaluate the cost effectiveness of maintaining the distribution channel.

6

RESEARCH METHODOLOGY

Research methodology is a way of systematically solving the research

problem it may be understood as a science of studying how research is done

scientifically the researchers study the various steps that are generally adopted in

studying the research problem along with the logic behind it

COLLECTION OF DATA

Fact expressed in quantitative from can be termed as "data". Data may be

classified either as "primary data" or "Secondary ".

PRIMARY DATA

The primary data is the data gathered by the researcher for the specific

purpose of research situation at hand it is the first hand information that researchers

gets from various sources like respondents, analogues case situation and research

experiments or the primary data has been collected from the distribution by supplying

them the questions from the customer.

SECONDARY DATA

Secondary data are already published data collected from some purpose other

than one confronting the researcher at a given point of time the secondary data can be

gathered from various sources like books journal, news papers reports of the

company, websites etc..,

SOURCE OF DATA

After the objective has been stated clearly, the next task was to collect relevant

data regarding the research study the data regarding the Indian and international diary

scenario were collected from the internet and other relevant data were also collected

from internet all through there were some data from newspaper and magazines but

the major portion was given by the company i.e. the assistant manager of the

respective departments. So the primary data involved data collected from milk booth

and from few consumers.

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DATA COLLECTION INSTRUMENT

The basic instrument used in collecting the data in this survey is the

questionnaire. Apart from that we had also gone through the record of the company

the data collection from the above includes

Data regarding model diary.

Data regarding the highest selling product.

Data regarding the contribution of each product towards sales.

Data regarding total sales and market shares of model diary.

Data regarding the distribution system of the MODEL DAIRY.

Sample size:

Population: finite (approx-15000)

Sample size: 155 members

AREAS OF THE STUDY

DATA: The area of the study has been confined to certain areas of Vijayawada city

only the areas of study include...

Padamata Lanka

Krishna Lanka

Nidamanuru

One Town.

Bhavanipuram.

Ibhrahimpatnam.

Kondapali.

8

LIMITATIONS OF THE STUDY

In spite of honest and sincere efforts by the researcher there are bound to be

certain discrepancies and inconsistencies again there were several Limitation both

statistical and non statistical within which there research has been carried out. Some

of the Limitation

1. The whole research study was carried out in Vijayawada only therefore the

result may not be same in zonal basis.

2. It was very difficult to generalize the main finding as the sample size was very

Small

3. Some of the finding has been taken in the research are based on the opinion,

Attitudes, feelings and perceptions of few respondents, but the respondents

were not willing to share their opinions and presumption, due to their busy

schedule.

4. Time, and the study period is another major contrasting factor.

9

INDUSTRY SCENARIO

Dairying has been of life in India since the ancient times. The modern diary

industry took roots in 1950 with the sale of bottled milk in Bombay from Array milk

colony. The first large scale milk products factory was started in 1945 at Co-operative

venture, with the assistance of UNICEF, for the production of milk powder, table

butter and ghee. These products were making from the buffalo milk.

India is the largest producer of milk in the world and dairy farming in the

single largest contributor to India’s GDP a part from being the biggest source of

employment. Dairy farming is a critical part of the Indian economy as it’s importance

stems from three important stems from three important factors .First of all it provides

income for small and marginalized farmers: second ,milk and its products are a

critical part of our diet and third dairy farming complements other forms of

agricultural activity.

India has been largest milk producer in the world since 1988 and milk

production has consistently improved over the past two decades. The production milk

in 2010 was estimated to be 117 million tones and increased approximately 4% to a

record 121.5 million tons in 2011.

The world’s largest development program over undertaken, the operation

flood undertook and gigantic task of upgrading and modernizing with production,

procurement, processing and marketing with the assistance provided by the world

bank and other external agencies, designed and implemented by the National Diary

Development Board (NDDB) and the Indian Diary Corporation. The project was

launched in July, 1970. Its basic concept compromises the establishment of co-

operative structure

OPERATION FLOOD – 1

Operation flood also referred to as `white revolution is a gigantic project,

propounded by the Government of India for developing dairy industry in the country.

The Operation Flood-2 originally mean to be completed in 1975 actually took the

period of about 9 years from 1970 to 79 for its completion at a total cost of about a

10

Rs. 116 Cores. The operation flood-I was wholly finance any selling in India free gifts

of 1, 26,000 Metric tons at skin milk powder and 42,000 Metric Tons of Buffer Oil

donated out of the surplus of European economic community.

ANANDPATTERN – 1

Under the operation Flood -1 the program for increasing milk production was

taken up in ice hinter lands of various breading tracks on Anand pattern and loudly

proclaimed with a trample. The Co – operative were started originally in 18 of Indian

Milk shed districts and later on mine more milk shed areas were added to make a total

of 27 in 10 states of the country viz., Maharashtra Tamilnadu, Andhra Pradesh, West

Bengal, Bihar, Haryana, Punjab, Uttar Pradesh and Rajasthan.

Those dairy Co – operatives are based on the model known as Anand pattern

of dairy Co – operative. Under Anand Pattern concept rural Co – operative

infrastructure was to be built in the village, the milk products were to form their

animals. In each participating village, the milk products were to form their own

village diary Co – operative. Thus Anand pattern diary co – operative union organizes

mobile veterinary and artificial insemination counters.

In the sphere of Co – operativisation the No. of Anand pattern organized

societies under operation flood was 63121 on April 1st 1991 as age INST 60753 a year

ago indicate one that years as many as 2368 new diary co – operatives were found.

OPERATION FLOOD – 2

The operation flood-2 that started that in July 1978 is scheduled to be

completed in 1985 at a cost Rs. 483 cores. A humble attempt has been made to

present a general appraisal of the achievements made in same sufficient fields during

Operation Flood-I. These achievements if at as all made particularly the Anand

Pattern Dairy Co-operative unions are to serve now as bedrock of operation flood-2.

These unions are to act as the starting nuclear for Co-operative charter federation, the

main instrument for the gigantic project flood-2. The average nuclear charter

federation world in 6 Districts Unions registered and unregistered.

The Indian Dairy corporation, National Dairy Development Board being

autonomy National Institutional probable are not required to indicate the basis on

11

which state with allocations were made in Operation Flood-I up to end of the 1979,

Gujarat State alone Government the lines shares of 1666.5 lakhs against 5 states

Haryana, Bihar, Rajasthan and Andhra Pradesh put together the total disbursement in

their case was 1732 lakhs only. This trend is going to be nationalized in Operation

Flood-2.

OPERATION FLOOD – 3

The Indian Dairy Industry is growing rapidly and may become a strong

competitor to World Dairy powder. The milk sector is the second largest contribution

to the agricultural economy in terms of produce. The Phenomenal growth is a result of

the National Dairy Development Board through Operation Flood Programme.

Operation Flood-3 now in this closing position consolidated the procurement

efforts to boost production. The projection for milk output for 2000 A.D., is nearly 90

million tone at a 5% growth rate. It is now 5 to 8 percent Dairy Factories established

under Operation Flood, which covers 170 milk Co-operative societies. They have a

milk drying component of about 697 Tones powder. In 1990-91 the Co-operatives

collectively nearly 10 million Liters and marketed 8 million Liters of Liquid milk

per day.

The operation flood being implemented by the National Dairy development

Board aims to enhance the average milk procurement to 13.7 Million Kilograms per

day by the year 1996 the concluding year of the operation flood 3 program. The peak

procurement level curing the period is expected to means 18.3 Million Kilograms

packed. The compulsive line figure for both during 1987 the base year of the

Operation flood program to was respectively 8.5 and 11.2 mkg-pd efforts are also

being made to increase capabilities of milk and production of milk powder.

Under the operation flood improving Animal Health case and good breeding

natural making available quality fodder under and incurring area and farm fertilization

under Co-operatives and processing were added. Inventory and animals has broadly

and Dairying from 1950 to 90 was 2.864 Cores achieve of all occasion to the

Operation Flood. The rapid growth in milk production did away with import of milk

powder except for a small quality (26.400 tones) during the drought years.

12

WORLD PRODUCTION

The world’s milk produce comprises cow’s milk, buffalo milk and milk from

sheep, goat and other animals. The worlds total milk production from all these sources

in 2009 was 703.350 million tones which was a considerable jump from 697.573

million tons in 2008 As far as cow’s milk production is concerned use ranks first

followed by India , china the Russian federation brazil and Germany respectively. The

world’s cow milk output in 2009 was 85.86 million tones of which use’s share was

85.86 million tones and India’s share was 45.14 million tones.

On the other hand regarding the worlds buffalo milk output, India ranks first

with a production of 59.87 million tons in 2009 followed by Pakistan, china, Egypt,

and Iran respectively. The worlds total output of buffalo milk in 2009 was 89.86

million tones.

CURRENT DAIRYING SCENE IN INDIA

The dairy industry in India made rapid progress, particularly during the last

two decades. Today, India occupies first position in milk production in the world,

surpassing the US. The credit, no doubt, goes to operation Flood, which has played a

key role in the development of Dairying. India is a milk consuming nation. This,

couples with our large population ensured steady increase in demand for milk.

The employment potential of Indian dairy sector is substantial. This sector

provides additional income and generates job opportunities for 80 million farmer

families. More than 70 per cent of marginal farmers and landless laborers maintain

dairy animals to supplement their incomes.

In India, there are 10.1 million farmers who are members of 77,000 village

dairy Co-operative societies, each of which is affiliated to one of 170 district and

regional Co-operative unions which in turn are part of a state Co-operative marketing

federation. There are 22 of these federations, which offer dairy and other products in

the market successfully while competing among themselves. At present, dairy farms

are owned by individuals, investors and multinationals.

13

The Co-operative sector has contributed significantly for the success of white

revolution in India. There are Co-operative more than 97,000 milk Co-operative

societies in 264 districts. This sector grows at the rate of 6.5 per cent annum.

ADVANTAGES OF INDIAN DAIRY INDUSTRY

In terms of total bovine population, India occupies the first position on the

world, with 176.7 million cattle and buffaloes. (World’s total bovine population is

1,420 million). A large bovine population, strong procurement infrastructure,

presence of highly skilled manpower, cheaper labor, and a large number of processing

and allied facilities are some of the advantages that the India dairy business has.

PRODUCTION TRENDS

Production of milk rose from 20.7 million tons in 2006-07 to 8.3 million tons in

2007-08. However, 45 per cent of the total milk is still handled by the traditional

sector. In 2006, 77 million buffaloes produced about 50 percent of the total milk

production in the country. In the same year, about 200 million cows produced about

45 per cent of the total milk production. (Nearly 156 million goats, sheep etc produce

only about 5 per cent of the total milk output.)

EXPORT POTENTIAL

India is not fully utilizing its export potential in respect of dairy products. The

cost of milk production in India is the lowest. And the dairy industry is not getting

any subsidy. There is an urgent need to pay special attention to quality of India has to

compete with other countries. At present, the country is exporting malted milk foods,

ghee, butter and cheese to countries like Bangladesh, UAE, Nepal, Sri Lanka, Oman

and Bahrain. Of course world milk prices are subject to dramatic fluctuations. Export

earnings from the live stock sector and related products rose to Rs.19, 250 million in

2007-2008 from Rs. 7,920 million in 2006-07.

DISAPPOINTING FACTS

Milk availability in India is still low at 212 grams/day per person. Of course, the

per capita availability of milk in the rural areas is barely 121 grams/day as compared

to 400 grams/day in urban areas.

14

Animal productivity remains low, as the national average is only 1.5 lit/day.

Productivity of Indian cattle is 10 per cent of the productivity of cattle in Israel and 30

per cent of the level achieved by the developed countries. Unless milk productivity is

raised, it is difficult to compete with Europe, America and Oceania.

What is more, only 10 per cent of the milk produced is in the organized sector,

leaving the remaining portion in the hands of milkmen thus providing chances for

adulteration and exploitation. Also, our cattle and buffaloes are slow maturing, show

irregular cycling behavior, produce fewer claves in their life-time, and suffer from

physical and physiological anomalies in reproduction.

There is a serious shortage of conventional feeds for feeding livestock. Both

quantitatively and qualitatively, there exists a wide gap in demand and availability of

fodder resources in India. During the last two decades, there has been no change in

the cultivated area devoted to fodder. It still stands at 4.4 per cent of the total cropped

area. It is estimated that 10 to 15 per cent increases can be recorded in the existing

milk production through adequate feeding of bovine population. In order to solve feed

shortage problem, we have to rely on cheap alternative feed to growing calves.

STEPS TAKEN SO FAR

The problem of low productivity of animals can be solved by ensuring

availability of feed and fodder. Concrete efforts are needed to improve the

productivity of fodder crops, develop grazing land, and promote agro-forestry systems

like silvipasture and research on low-cost feed items. Extensive research has been

carried out to find out the utility of items like apple ground nut hulls, milk cake,

neem cake, salad meal, soya pulp, rice bran and brewery waste.

On June 9, 1992, the Govt., of India issued an order under section 3 of the

essential commodities Act, 1955. According to this order, known as Milk and Milk

Products Order (MMPO) 1992, milk does not have to mean just cow or buffalo milk,

it could also be goat milk or even a mixture of the three. The various objectives of

MMPO include:

15

Facilitating supply or availability of milk by balancing uneven supplies in

different regions.

Maintenance and increase of milk production and supplies and ensuring

equitable distribution.

Establishment of proper standards and norms for control in handling milk and

milk products.

Establishment, promotion or registration of any industry related to milk or

milk products.

Such other objectives incidental to the effective implementation of the

MMPO.

The milk unions are urging the government to either ban OGL imports of

skimmed milk powder (SMP) or impose duty on the same. They argue that prices of

imported powder should be at par with those of the domestic products.

The price of skimmed milk powder is coming down under pressure from

imports. It is said that levying of minimum import duty of 35 per cent of SMP would

provide a level playing field to the producers. (India gets about 5,000 tons of imported

milk powder annually).

LATEST DEVELOPMENT IN THE DAIRY SECTOR

Formation of new dairy Co-operatives in Operation flood areas to bring 3.5

million members under the Co-operative fold in addition to the 9 million

members now being served by dairy Co-operatives.

Providing vocational opportunities and fostering entrepreneurship among

dairy-science student trainees to equip them with knowledge and experience

so that they may take up dairying as a profession.

TOP MOST PRIORITY

In the livestock sector, productivity holds the key. The major thrust should be

on genetic up gradation to improve productivity and production. Of course, priority

should be given to infrastructure development, feed management and better health

care services

16

CURRENT SCENARIO

Of the total milk output, the organized sector still handles an estimated output

of 12% only despite vigorous dairy development activities. At present there are 25.2

dairy plants in the public and Co-operative sectors including pilot dairies with an

average output of 12.2 million liters. The milk market covers 528 major towns, 4

metros and 149 class one and 375 smaller towns.

About 300 million supply every day. The milk production enhancement units

are being adequately strengthened. The Indian of Agriculture Research and the

“National Dairy Development Board” are mounting massive efforts to integrate dairy

science research, education, extension and development.

Federation that was guided by “National Co-operative Dairy Federation of

India”. The apex body of milk Co-operative societies. A national wide network

system of “Multi tier producers Co-operative” which are domestic in structural and

are professionally managed has been established. At present this program is providing

a joint additional income of Rs. 1200 cores from milk. It is heartening to note that the

Dairy equipment industry has grown to such an extent that most of Dairy Industry

needs are met indigenously.

TECHNOLOGY MISSION

The operation flood program prepared the ground for launching another

massive program at the national level called “Technology Mission on Dairy

Development (TMDD) on June 11, 1988. The main objective is to accelerate the pace

of growth of dairy industry in India. To achieve this end, the operation flood programs

such as the dairy research programs processing technology and product manufacturing

etc. the mission operation areas has covered approximately 60% of the country by

1995. The mission will functions through the adoption of locating specific strategies

such as people’s participation, demonstration of excellence, better land management

cost effective handling and processing system and intensive marketing.

17

DAIRY PROCESSION TECHNOLOGY

Research studies in dairy technology in NDRI Karnal have led to the

development of purely vegetarian processed cheese, a synthetic ghee flavor and Ghee

making plant on the principle of Hydrodynamics and Heat transfer in horizontal thin

scalped surface heat exchanges with a capacity to handle 500-600 kg an hour of

creamy butter. A two-fold increase in shelf life in cheese was attained. The methods

of manufacturing griehand cheese spreads of various flavors etc., have been

successfully developed by NDDB.

GROWTH IN CO-OPERATIVE

In order to build a viable and self sustaining National Dairy Industry on Co-

operative lined NDDB launched a project christened “Operation Flood” in 1970.

Funds mobilized from sale of products based on foreign food with its development

program It spurred Indian Dairy industry launch a “White revolution”.

In sphere of Co-operatives the number of Anand pattern organized societies

under operation flood were 63,121 till date and in next year, as many as produced and

sold by these Co-operative fetched approximately up to 1000 cores per year.

Beside the studies in milk the “operation flood” program has achieved success

on other fronts also. Import of milk solids has been already ended and India recently

exported 30,000 tons of milk powder. India is in the way of attaining total self-

reliance and next self sufficiency in milk production.

MAJOR DAIRY PRODUCTS AND BRANDS

COMPANY BRANDS MAJOR PRODUCTS

Nestle Milk – Maid,

Cerelac Lactogen,

Milo & Everyday

Sweet Condensed Milk

powder, Malted food, milk

powder & dairy whitener,

Ghee & Ice Cream.

Mild Foods Limited Milk Food Ghee & Ice Cream

Cadbury Bourn Vita Infant Milk Food,

Malted Milk Food.

18

NATIONAL DAIRY DEVELOPMENT BOARD (NDDB)

At the time of Industrialization at cattle feed factory at Kajarie in October

1964 the late Sri LALBAHADUR SASTRY, the prime Minister of India paid

unscheduled visits producers co – operative societies and stated there overnight. He

was impressed by the social economic changes brought milk co – operatives in

Krishna district and desired to have a national level organization to milk producer’s

co – operative societies replicateanansin other part of the country.

Thus the National Dairy Development Board was sent up under the

empowerment of Ministry of Agriculture and Irrigation. Govt. of India in September

1965 under the society Regulation act 1860 and the Bombay trusts act 1950. The

president of India nominates the Board of Directors including Chairman, Secretary,

and National Dairy Development Board in the chief of the organization.

ANAND PATTERAN DAIRY DEVELOPMENT

The information Anand pattern of milk co – operative was launched with the

organization of Krishna District Co – operative Milk Producers Union Limited. In this

pattern the function of dairy is milk procurement, processing and marketing are

controlled by the milk products themselves.

19

INSTALLAED PROCESSING CAPACITIES

S. No.Name of the

Dairy

Milk

ProcessingPowder Mfg

Butter

Mfg

Ghee

MfgU. H. T.

1 Visakha Dairy 300 13 - 8 50

2 Rajahmundry 150 - - 4 -

3 Vijayawada 250 22 12 25 -

4 Ongole Dairy 300 30 8 10 -

5 Nellore Dairy 75 - - 4 -

6 Chittor MPF 200 14 - 8 -

7 Nandhyal MPF 150 10 - 4 -

8 Hyderabad 250 12 - 8 30

9Mother Dairy

Hayatnagar200 - 4 4 -

10 Other Dairies 249 - - - -

DAIRY INDUSTRY IN ANDHRA PRADESH

The program Dairy Industry was mooted with commendable help of the

United National International Children’s Emergency Fund, Food and Agriculture

Organization and Freedom from Hunger Company Campaign Organization of the

U.K. these organization insisted a lot of the establishment of the dairy units at Hydria

and Vijayawada in 1967 and 1969 respectively, which lead to pioneer dairy

development in Andhra Pradesh later to set cooling and chilling centers have been

setup to feed these two gigantic units.

20

The Government of Andhra Pradesh started dairy development corporation to

interest of milk producers and ensuring adequate supply of fresh milk at reasonable

price to the urban consumers as A. P. D. D. C., come in to the existence on 2nd April

1974. A. P. D. D. C., providing employment to nearly 20 employees and organism

easy many as 87 dairy units including seven milk factories, 13 district dairies, 22

chilling centers, 18 cooling centre and 15 mini cooling centers.

In addition to that the private units have been contributing their little mite in

the development of dairy industry M/s. Hindustan milk foods that has started a malted

milk product factory in Rajahmundry. Further to enhance working efficiency and to

increase the turnover, the Government has constituted on autonomous dairy

development. Corporation on the recommendation measure the dairy industry

improving towards massive milk production and milk collections.

DAIRY DEVELOPMENT

In 1960 pilot milk supply scheme was started in the state for the dairy

development, its initial capacity was 100 liters a day in the time of starting. Now its

daily collection increased to 11 lakhs liters per day. It is also working as alien

between milk producers of the towns by providing reasonable price to the producers

to maintain stable market.

A. P. DAIRY DEVELOPMENT CO – OPERATIVE FEDERATION (A. P. D. D.

C. F.)

A. P. D. D. C. F. was formed in October, 1981 to implement Operation Flood

– 2 programs through active involvement of producers in organization milk

production, procurements, processing and marketing on “three – tier”, Co – operative

structure as per the National Government of India. The three –tier system consists of

primary dairy co – operatives societies 13 village level, co – operative unions at

district level and federation at state level.

21

OPERATION FLOOD

In our state operation flood was divided in three types “Anand Level”.

1. Village Level – D. C. S.

2. District Level – 13

OPERATION FLOOD PROGRAMME

Indian dairy Development Corporation own the responsibility of

implementation of operation flood programs, which provides money assistance, put

70% towards loans and 30% as subsidy. National Dairy Development Corporation

selected district of the State for implementation of operation fold.

DISTRICT SELECTED UNDER OPERATIONS

22

District Milk sheds / unions

Krishna Krishna

Srikakulam Vishaka

Vijayanagaram Vishaka

Vishakapatnam Vishaka

East Godavari Godavari

West Godavari Godavari

Chitoor Chitoor

Kurnool Kurnool

Cuddapah Cuddapah

Nalgonda Nalgonda

Rangareddy Rangareddy

APDCF RECENT TRENDS

Even though Andhra Pradesh is the second largest milk producing State in

India, (after Uttar Pradesh) the dairy sector in the State still offers significant

opportunities for entrepreneurs and farmers to set up units.

While the State produced about 112.5 lakh tonnes (lt) of milk last year, with

an annual growth rate of 6.5 per cent, the State Government, bankers and existing

players in this sector feel that there is still a significant gap between supply and

demand.

While the State Government has unfurled a Rs 6,200-crore State Milk Mission

up to 2015, banks, prominently NABARD, State Bank of Hyderabad and Andhra

Bank, are gearing up to provide easier access to funding for prospective

entrepreneurs.

One area of concern, however, is the persistent lower levels of milk yield per

animal, accentuated by factors such as fodder scarcity, inadequate veterinary support

and lack of professional management.

From a broader perspective, the State is endowed with rich livestock

resources, having 255 lakh sheep valued at Rs 2,550 crore, 133 lakh buffaloes (Rs

13,300 crore) and 112 lakh cattle (Rs 11,200 crore).

UNTAPPED POTENTIAL

“However there are still vast areas of untapped potential in the livestock

sector,” says Dr M.V. Reddy, Director of State Animal Husbandry Department. For

instance, the productivity of a buffaloes is at 4 kg per animal, while the potential is 6

kg. In other words, while the current production is 76 lt, the potential is 150 lt.

It has been projected that there are adequate entrepreneurship opportunities

available in dairy-related areas such as male calf farming, milk chilling and

processing, bio-gas plants, dairy products, fodder production, pharmaceuticals and

consultancy. The State Government is promoting about 9,000 mini dairy units with

23

five milch animals each in the current fiscal through 25 per cent subsidy on each

animal.

FINANCING

Mr P. Mohanaiah, Nabard Chief General Manager, Hyderabad, said the bank

had received about 17,000 claims from prospective dairy entrepreneurs so far this

fiscal, out of which 14,000 have been cleared and Rs 14 crore worth subsidy already

released.

What makes banks more inclined towards financing of diary activity? The

State has over 13 lakh self help groups that are linked through bank finance to the

tune of Rs 13,719 crore. Most of the groups have been opting for dairying in their

micro credit plan and an average more than 60 per cent of the financing is done for

milch cattle rearing.

24

SELECTING THE ANIMAL TO FARM WITH – COWS V/S. BUFFALOES

Cows Buffaloes

Good quality cows are available in the

market and it cost around Rs. 1200 to Rs.

1500 per liter of milk production per day.

(e.g. Cost of a cow producing 10 liter of

Milk per day will be between Rs. 12,000

to Rs. 15,000).

In India, we have good buffalo breeds

like Murrah and Mehsana, which are

suitable for commercial dairy farm.

if proper care is given, cows breed

regularly giving one calf every 13 – 14

month interval.

Buffalo milk has more demand for

making butter and butter oil (Ghee), as fat

percentage in milk is higher then cow.

Buffalo milk is also preferred for making

tea, a welcoming drink in common Indian

household.

They are more docile and can be handled

easily. Good milk yielding cross breeds

(Holsteing and Jersey crosses) has well

adapted to Indian climate.

Buffaloes can be maintained on more

fibrous crop residues, hence scope for

reducing feed cost.

The fat percentage of cow’s milk varies

from 3-5.5%and is lower then buiffaloes.

Buffaloes largely mature late and give

birth to calves at 16 to 18 months

interval. Male calves fetch little value.

Buffaloes need cooling facility e.g.

wallowing tank or showers / foggers with

fan.

25

WORLDS MILK OUTPUT BY ANIMAL

Out of worlds combined milk output cow’s milk represented 84% in 2009

followed by 13%taken up by buffalo milk 2.2% by goat milk 1.3% by sheep and 0.2%

by camel.

In recent years cow’s milk production has been declined in many parts of the

world like the European Union, USA, Australia, Japan, and china. On the other hand

buffalo milk has kept increasing. Of the total buffalo milk output, more than 90% is

produced by India and Pakistan. As far as milk from other animals is concerned

according to fao data for 2010 goat milk was mainly produced in Asia, 21% in Africa

and 15% in Europe. Regarding sheep milk production Asia’s share is 46% and Europe

share is 34% while for camel milk Africa’s share is 89% of the world countries.

The following tables will give the milk production by animal.

TOP 10 COW MILK PRODUCING COUNTRIES IN 2010

COUNTRYPRODUCTION(TONNES)

USA 8,58,59,400

INDIA 4,51,40,000

CHINA 3,55,09,831

BRAZIL 2,91,12,000

GERMANY 2,79,38,000

FRANCE 2,33,41,000

NEW ZEALAND 1,54,00,000

UK 1,32,36,500

POLAND 1,24,47,200

26

WORLD BUFFALO MILK PRODUCTION IN 2010

COUNTRY PRODUCTION(TONNES)

INDIA 59,874

PAKISTAN 22,279

CHINA 3,000

IRAN 240

MILK PRODUCTION IN INDIA

Dairy farming alleviates poverty and un employment, especially in rural

areas .According it has been growing over the years. The total volume of milk

produced grew more than seven times from 17million tones in 1950-51 to 11603

million tons in 2010-11 . This tremendous rise in production is primarily the result of

the dairy farming policy that was implemented in operation flood.

The major milk producing states are Uttar Pradesh, Andhra Pradesh, Rajasthan, and

Madhyapradesh.

WORLDS MILK PRODUCTION BY ANIMAL

Type of milk 2009 2010

ANIMAL

GROWTH(2009-

2010

COW MILK 584.164 58.464 +0.6%

BUFFALO MILK 87.291 89.960 +3.1%

GOAT MILK 15.412 15.333 -0.5%

SHEEP MILK 9.070 8.975 -1.0%

OTHER 1.636 1.636 +0.0%

WORLD

PRODUCTION697.573 703.350 +0.8%

27

STATE WISE MIL PRODUCTION IN 2010-2011

STATES COW

MILK

BUFFALO

MILK

GOAT

MILK

TOTAL

UTTAR PRADESH 3575 13902 1159 20203

ANDHRA

PRADESH

1029 7601 0.1 10429

RAJASTHAN 2320 5840 1007 9548

PUNJAB 273 6323 44 9389

GUJARAT 1912 5285 231 8844

MAHARASTRA 1155 3355 282 7679

MADHYAPRADES

H

2548 3758 417 7167

BIHAR 2023 2807 219 6124

HARYANA 376 5020 61 6006

TAMILNADU 789 761 --- 5778

TOTAL 22467 59201 3910 112540

PER CAPITAL AVAILABILITY OF MILK

Per capita availability of milk in India 2009-2010 was 263gm per day . This

per capita availability as 130 gm per day during 1950-51. It has been increasing

gradually over the past decades though it is still lower than the worlds average of 29.4

gm per day.

In the marketing of milk and its products dairy cooperatives account for a

major share of processed milk. Milk is processed and marketed by 177 milk

producer’s cooperative milk marketing federations.

In 2009-10 the average daily cooperative milk marketing output stood at 21.12

million liters with an annual growth of about 6.2% over the previous five years . This

organized sector currently handles this volume in over 400 dairy plants.

Mother dairy one of the world largest liquid milk plants is located in Delhi and

handles over 800000 liters of milk every day.

28

Over the years brands created by cooperation’s have become synonymous

with quality and value AMUL, VIJAYA, VERKA, SARAS, NANDHINI, MILMA

AND GOKUL are among those that have earned the customers trust across India.

EXPORTS

India exports skimmed milk powder whole milk powder, ghee, butter, cheese,

condensed milk, milk food for babies, milk and cream in powder, butter milk, etc.

These exports of dairy products are shown in below table for the year 2009-2010.

PRODUCT QUANTITY(MILLION

TONNES)

VALUE(MILLIONS)

SKIMMEDMILK

POWDER

12173.50 1370.515

OTHER GHEE 3084.23 721.886

BUTTER 1275.52 199.899

MILK&CREAM OF A

FAT CONTENT BY

WEIGHT 1%

5176.45 150.940

WHOLE MILK 679.10 107.106

OTHER CHEESE 450.89 78.729

OTHER MILK FOR

BABIES

172.88 47.590

OTHER BUTTER OIL 214.18 35945

IMPORTS

Even though India ranks first in the world in the production of milk it imports

some milk products like skimmed milk powder, milk and cream, buttermilk, whey,

cheese and curd.

A SUGGESTION TO HELP YOU IN DECIDING THE ANIMAL TO FARM

WITH

29

Middle class health – conscious Indian families prefer low fat milk for

consumption as liquid milk. We suggest you to go for a commercial farm of mixed

type. (Cross breed, cows and buffaloes kept in separate rows under one shed).

Conduct a thorough study of the immediate market where you are planning to market

your milk you can mix milk from both type of animals and sold as per need of the

market. Hotels and some general customers (can be around 30%) prefer pure buffalo

milk. Hospitals, sanitariums prefer cow’s milk

A GLANCE AT THE INFRASTRUCTURE AND MANPOWER

REQUIREMENTS

The space required per animal should be 40sq.ft in shed and 80sq.ft open space.

Besides, you will also need:

1. One room 10”x 10” for keeping implements.

2. One room 10”x 12” for milk storage

3. Office cum living room of suitable size.

4. Water tank capable of storing minimum 2000 liters

5. Bore well with capacity to fill water tank in 1 hr

Total land requirement for a unit of 20 animals can be sited as 3000sq.ft. There

should be space for expansion. Ideal space requirement for 100 animals is 13,000 to

15,000sq.ft (120”x 125”). For 20 animals initially, you can make contractual

arrangements for getting an assured supply of 300kgs, of Lucerne and 400 kgs. Of

maize fodders per day.

However, in long run, as the strength of you farm will go up to 100 animals, it is

advisable that you should go for a lease land of 15 to 20 acres with irrigation facility

to cultivate green fodder for your animals. (one acre of green fodder cultivation for

every five animals is required as a thumb rule.) The economics of whole dairy animal

management depends upon its economic feeding. By making fodders like Lucerne or

Berseem available for your animals you can reduce cost on feeding concentrate feed.

The strength of laborers in your farm can vary with number of animals usually the

thumb rule is one labor for every 10 animals on milk or 20 dry animals or 20 young

stock.

30

Why do Dairy Farming?

Dairying is an important source of subsidiary income to small/marginal

farmers and agricultural laborers. The manure from animals provides a good source of

organic matter for improving soil fertility and crop yields. The gober gas from the

dung is used as fuel for domestic purposes as also for running engines for drawing

water from well. The surplus fodder and agricultural by – products are gainfully

utilized for feeding the animals. Almost all draught power for farm operations and

transportation is supplied by bullocks. Since agriculture is mostly seasonal, there is a

possibility of finding employment throughout the year for many persons through dairy

farming. Thus, dairy also provides employment throughout the year. The main

beneficiaries of dairy programmers are small/marginal farmers and landless laborers.

A farmer can earn a gross surplus of about Rs. 12,000 per year from a unit consisting

of 2 milking buffaloes.

The capital investment required for purchase of 2 buffaloes is Rs. 18,223/-.

Even after paying a sum of Rs.4294/- per annum towards repayment of the loan and

interest the farmer can earn a net surplus of Rs. 6000 – 9000/- approximately per year.

(For details see model scheme enclosed). Even more profits can be earned depending

upon the breed of animal, managerial skills and marketing potential.

According to World Bank estimates about 75 percent of India’s 940 million

people are in 5.87 million villages, cultivating over 145 million hectares of cropland.

Average farm size is about 1.66 hectares. Among 70 million rural households, 42

percent operate up to 2 hectares and 37 percent are landless households. These

landless and small farmers have in their possessions 53 percent of the animals and

produce 51 percent of the milk. Thus, small/marginal farmers and land less

agricultural laborers’ play a very important role in milk production of the country.

Dairy farming can also be taken up as a main occupation around big urban centers

where the demand for milk is high.

SCOPE FOR DAIRY FARMING AND ITS NATIONAL IMPORTANCE

The total milk production in the country for the year 2001-02 was estimated at

84.6 million metric tons. At this production the per capita availability was to be 226

31

grams per day against the minimum requirement of 250 grams per day as

recommended by ICMR. Thus, there is a tremendous scope/potential for increasing

the milk production.

The population of breeding cows and buffaloes in milk over 3 years of age

was 62.6 million and 42.4 million, respectively (1992 census)

Central and State governments are giving considerable financial assistance for

creating infrastructure facilities for milk production. The ninth plan outlay on Animal

Husbandry and Dairying was Rs. 2345 crores.

FINANCIAL ASSISTANCE AVAILABLE FROM BANKS/ NABARD FOR

DAIRY FARMING

NABARD is an apex institution for all matters relating to policy, planning and

operation in the field of agricultural credit. It promotes development through

formulation and appraisal of projects through a well organized t\Technical Services

Department at the Head Office and Technical Cells at each of the Regional offices.

Loan from banks with refinance facility from NABARD is available for

starting dairy farming. For obtaining bank loan, the farmers should apply to the

nearest branch of a commercial or co-operative Bank in their area in the prescribed

application for which is available in the branches of financing banks. The Technical

Officer attached to or the Manager of the bank can help/give guidance to the farmers

in preparing the project report to obtain bank loan.

For dairy schemes with very large outlays, detailed reports will have to be

prepared. The items of finance would include capital asset items such as purchase of

milk animals, construction of sheds, purchase of equipments etc. the feeding cost

during the initial period of one/two months is capitalized and given as term loan.

Facilities such as cost of land development, fencing, and digging of well,

commissioning of diesel engine/pump set, electricity connections, essential servants’

quarters, godown, transports vehicle, milk processing facilities etc. can be considered

for loan. Cost of land is no considered for loan. However, if land is purchased for

32

setting up a dairy farm, its cost can be treated as party’s margin up to 10% of the total

cost of project.

SCHEME FORMULATION FOR BANK LOAN

A Scheme can be prepared by a beneficiary after consulting local technical

persons of State animal husbandry department, DRADA, SLPP etc., dairy co-

operative society/union/federation/commercial dairy farmers. If possible, the

beneficiaries should also visit progressive dairy farmers and

government/military/agricultural university dairy farm in the vicinity and discuss the

profitability of dairy farming. A good practical training and experience in dairy

farming will be highly desirable.

The dairy co-operative societies established in the villages as result of efforts

by the Dairy Development Department of State Government and National Dairy

Development Board would provide all supporting facilities particularly marketing of

fluid milk. Nearness of dairy farm to such a society, veterinary aid centre, artificial

insemination centre should be ensured. There is a good demand for milk, if the dairy

farm is located near urban centre.

The scheme should include information on land, livestock markets,

availability of water, feeds, fodders, veterinary aid, breeding facilities, marketing

aspects, training facilities, experience of the farmer and the type of assistance

available from State Government, dairy society/union/federation.

The scheme should also include information on the number of and types of

animals to purchased their breeds, production performance, cost and other relevant

input and output costs with their description. Based on this, the total cost of the

project, margin money to be provided by the beneficiary, requirement of bank loan,

estimated annual expenditure, income, profit and loss statement, repayment period,

etc. can be worked out and shown in the project report.

A format developed for formulation of dairy development schemes is given as

annexure I.

S.No Category of FarmerLevel of predevelopment

return to resources

Beneficiary’s

Contribution

33

(a) Small Farmers Up to Rs.11,,000 5%

(b) Medium Farmers Rs.11,001 – Rs. 19,250 10%

(c) Large Farmers Above Rs. 19,251 15%

INTEREST RATE

As per the RBI guidelines the present rate of interest to the ultimate beneficiary

financed by various agencies are as under:

No. Loan Amount CB’s and RRB’s SLDB/SCB

(a) Up to and

inclusive of Rs.

25000

12% As determined by

SCB/SLDB subject

to minimum 12%

(b) Over Rs. 25,000

and up to Rs. 2

Lakhs

13.5% -do-

(c) Over Rs. 2.0

Lakhs

As determined by

the banks

-do-

PRODUCTION PREFERENCE

GROWTH

The average birth wt.(Indian buffaloes) low 21 kg High 41 kg higher in male

calves than in females. Average daily gain of 548 gm between 3 – 6 months 404 gm

between births to 36 months. Body weight at first calving ranges from 367 kg

(Dharwati) 531kg (Nili Ravi) Higher growth rate in reveries breeds than swamp.

DIAL-A-MARKET…TO INDIA

Today, India is ‘The Oyster’ of the global dairy industry. It offers

opportunities galore to entrepreneurs worldwide, who wish to capitalize on one of the

world’s largest and fastest growing markets for milk and milk products. A bagful of

‘pearls’ awaits the international dairy processor in India. The Indian dairy industry is

34

rapidly growing, trying to keep pace with the galloping progress around the world. As

he expands his overseas operations to India many profitable options await him. He

may transfer technology, sign joint ventures or use India as a sourcing center for

regional exports. The liberalization of the Indian economy beckons to MNC’s and

foreign investors alike.

ADVANTAGES

Light in weight, easy to handle and no danger of breakage.

Distribution costs lower (occupies less space, lower pay-load due to light

weight, no collection of empties).

Bottle – washing costs eliminated (saving in equipment, detergents, steam,

etc.).

Tamper – proof,

Effective sales message can be printed.

Less Noisy (during filling, sealing and transportation).

No exposure to sunlight.

Filling machinery compact and occupied much less space.

No container deposit needed.

DISADVANTAGES

Costing higher per unit milk distributed.

Product not visible.

Difficult to remove cream.

Inspection of milk (for sediment) not possible.

Regular supply of special paper/film essential.

Not so easy to open

Some cases of leakage may occur.

DAIRY PLANTS

India’s modern milk supply goes back to December 15, 1950, when the Aarey

Milk Plant in Bombay launched the supply of pasteurized and bottled milk on large-

35

scale for the first time in India. Subsequently, over the years, the share of the

organized sector increased after the launching of Operation Flood in 1970.

PROMOTION THE SALES

These include (for both wholesale and retail sales) the following:

a) Home delivery.

b) Milk booths or distribution depots/bars.

c) Stores.

d) Soda fountains

e) Coin vending machines

f) Automatic dispensers

g) Factories, hospitals, jails, restaurants, schools, etc.

UTILIZATION OF RETURNED MILK

Unsold milk presents a problem of economic disposal. Under tropical

conditions, as in India, the returned milk should not be send again for sale as liquid

milk since exposure to high temperatures during its inward and outward journeys

subject it to quality deterioration and hence may cause consumer complaints. The

unsold milk can be given for separation or utilized for preparation of dahi, etc.

MILK PRODUCTION IN WORLD

India is the largest animal milk producing country in the world followed by

USA. It is estimated that the milk production would cross 50million tones by the end

of 1995 and target to 250 million tons by 2020AD.

1950 - 17 million tones

1996 - 70.8 million tones

1997 – 74.3mT

(Projected) 2020 -240mT

Expected to reach – 220 to 250mT – 2020

36

India contributes to world milk production rise from 12 -15% & it will increase up to

30-35% (year 2020)

What does the Indian dairy has to offer to foreign investor?

India is a land of opportunity for investor looking for new and expanding markets.

Dairy food processing holds immense potential for high returns. Growths prospective

in the dairy food sector are termed healthy, According to various studies on the

subject. The basic infrastructural elements for a successful enterprise are in

place

Key elements for marketing system

Raw material (milk) availability

An established infrastructure of technology

Supporting man power

DAIRY ORGANIZATION

Dairy is an important source of subsidiary income to small/marginal farmers

and agricultural labors. The manures from animals provide a good source of organic

matter for improving soil fertility and crop yields. The goober gas from the dung is

used as a fuel for domestic purposes as also for running engines for drawing water

from well. The surplus fodder and agricultural by products are gainfully utilized for

feeding the animals. Almost all draught power for farm operations and transportation

is supplied by bullocks. Since agriculture is mostly seasonal, there is a possibility of

finding the employment throughout the year for many persons through dairy farming.

A farmer can earn a gross surplus of about Rs.12, 000 per year from a unit consisting

of 2 milking buffaloes, the capital investment required for purchase two buffalo is Rs.

18,223. Even after paying a sum of Rs. 429 towards repayment of the loan and

interest the farmer can earn a net surplus of Rs. 6,000 to 9,000 approximately per

year.

PACKAGE OF COMMON MANAGEMENT PRACTICES RECOMMENDED

FOR DAIRY FARMER

37

Some of the major norms and recommended practices are as follows.

HOUSING

a. Construct shed on dry, properly raised ground.

b. Void water-logging, marshy and heavy rainfall areas.

c. The walls of the shade should be 1.5 to 2mts high.

d. The walls should be plastered to make them damp proof.

e. The cattle shade should be well ventilated.

f. The floor should be pucca/hard, even non-slippery impervious, well sloped

(3m per meter) and properly drained to remain dry and clean.

g. Provide 0.25 meter road, pucca drain at the rear of the standing space.

h. Provide 5-10sq, meter loaf space for each animal.

i. Provide proper shade and cool drinking water in summer.

j. In winter keep animals indoor during night and rain.

k. Provide individual bedding daily.

l. Maintain sanitary condition around shed.

m. Give adequate space for the animals.

FEEDING OF MILCH ANIMALS

a. Feed the animals with best feeds and fodders.

b. Cut the fodder at the right stage of their growth.

c. Chaff roughage before feeding

d. Moisten the concentrate mixture before feeding.

e. To estimate the daily feed requirement remembers that the animals consume

about 2.5 to 3.0 per cent of their body weight on dry matter basis.

MILKING IF ANIMALS

a. Milk the animals two to three times a day.

b. Wash the udder and teat with antiseptic lotions. Luke-warm water and dry

before milking.

c. Milk should be free from any contagious diseases and should wash his hands

PROTECTION AGAINST DISEASES

38

a) Be on the alert for signs of illness such as reduced feed intake, fever, abnormal

discharge or unusual behavior.

b) In case of outbreak of contagious disease, immediately segregate the sick, in-

contact and the healthy animals and take necessary disease control measures.

BREEDING CARE

a. Observe the animal closely and keep specific record of its coming in heat,

duration of heat, insemination, conception and calving.

b. Breed the animals in time.

CARE OF CALVES

a. Take care of new born calf.

b. Treat/disinfect the navel cord with tincture of iodine soon as it is cut with a

sharp knife.

c. Keep the calf separately from birth till two months of age in a dry clean and

well-ventilated place. Dehorn the calves around 4 to 5 days of age easy

management when they grow.

COMPANY PROFILE

39

WORK PROFILE

We have established a dairy unit named MODELMILK DAIRY (P) limited.The

promoters of the company are Sri D. Brahamanadam B.Nageswara

Rao,Dr.N.Venkata Rao & B.Brahma Naidu., at NIDUMANURU village,

Ramavarapadu Mandal, Vijayawada, Krishna District, Andhra Pradesh and

commissioned for commercial production for marketing during September 1999 it

handle 225000 liters of milk per day. The plant is located on Vijayawada –

Vishakhapatnam national Highway (NH.5), 5 kms from Vijayawada city towards

Vishakhapatnam, in an area of 13.00 acre. The unit is registered under S.S.I. The milk

in bulk is being purchased from other dairies processed, homogenized, packed and

marketed mainly in Major cities in Andhra Pradesh. The milk is being also sold in

Vijayawada, Guntur and Eluru town basing on consumers demand. By marketing the

milk in various towns, assured market outlet is provided to large number of village

milk producers for their surplus milk. The required machinery is installed in the dairy.

Strict quality standards are applied before marketing the milk for which well-

equipped laboratory is established. In order to deliver quality milk to the consumers

insulated trucks are used to transport milk from the dairy to various destinations.

MODEL MILKDAIRY PVT LTD is a dream come through to the dynamic

young and entrepreneurs who have jointly efforted to convert their skills, knowledge

and experience in the field of processing and producing milk and milk products.

Realizing the milk production potentialities of the inversion track of the

government of Andhra Pradesh and government of India, with self managed financial

resources and establish the Modern dairy in the year 1995 at Narasaraopet and erected

new plant at Nidammanuru the year 1995. Today, the dairy has passed to equate

major dairies in the southern region which has not only captured the market by also

has made Modern and accepted brand and preference of the consumers.

40

Model Milk Dairy (P) Ltd (MMDPL) Handle 6.5 lakhs litersof milk per a day in all

the packing stations and main dairy plant. Model Milk Dairy (P) Ltd having good

infrastructure and well equipped with all latest machinery to process 6.5 lakhs liters of

milk per a day which is the highest in the state of A.P. which has developed in a

decade.

MMDPL handles milk in the following locations:

PLACING LOCATION HANDLING CAPACITY PER DAY

GUDUR 4.0 LAKH LITERS

VELLALA CHERUVU 1.0 LAKH LITERS

BHIMADOLU 1.0 LAKH LITERS

PALAMANER 1.5 LAKH LITERS

VISION

To deliver best quality of milk and milk products at reasonable rates to maintain the

leadership in the milk market.

MISSION

To achieve market leadership in the area of milk products.

MAIN OBJECTIVES

To provide assured year and market for the surplus milk procured in the rural

areas supply wholesome milk and milk product to the urban consumer and to

stimulate milk production and to develop the required infrastructure.

PROCUREMENT OF MILK

MMDPL established 25 chilling centers in A.P and 8 chilling centers in

Narasaraopet to procure both cow and buffalo milk good quality milk is being

procured and chilling with in short time at chilling centers, to retain freshness of milk.

The strength of the MMDPL is to procure 6.0 lakhs liters of milk directly from agents

41

or farmers by having full equipped machinery and professionally trained staff.

MMDPL have full control on its systems, so that pure quality of milk and milk

products can be supplied to customers.

PRODUCTION

MMDPL has its main dairy plant at Nidumanuru with handling capacity of 4.0lakhs

liters of milk per day.

Market milk: - Main plant is processing 2.5 lakhs liters of milk per day in

automatic sachet filling machines to supply and distribution of milk to

Vijayawada, Eluru and Guntur etc... In insulated puffs.S

There is continuous growth in sale of milk from 50000 liters to 250000 liter

within a span of one-decade. MMDPL maintaining consistency in quality and

is standards consumers have much confidence.

MMDPL having its own supply chain management, which makes ease in

timely distribution and assured supply, which gains customers’ satisfaction.

At our calamander unit process and supply of 1.00 Lakh liters of milk and

20000 liters of Curd to Bangalore city.

At our vellalacheruvu and Bhimadolu

Packing stations processing and packing 2.0 Lakh liters of milk to Hyderabad,

Warangal Vijayawada Eluru Guntur and Rajahmundry.

PRODUCTS

The main plant has capacities with modern equipment to manufacture milk products

milk products like butter, ghee and milk powder.

Butter is made from pure cow and buffalo fat under hygienically processed

through continues butter making machine with a capacity of 8 tons per day.

Ghee is made from pure cow and buffalo butter under supervision of 30 years

experienced dairy technologists to retain granulation, color and aroma of ghee

with a capacity of 8 tons per day. Ghee is packed in a wide range of 7ML to

15 KGS.

42

Milk powder is made from fresh cow and buffalo milk, plant is capable of

making all type of milk powders with a capacity of 15 tones per day.

By-products like sterilized flavored milk, Lassie, Khova, Milk cake, Mysore

Palak Panner.

PRODUCT LINE

Milk T.M.DTM,FCM,STD(200ml,500ml,200ml).

UHT MILK 1lt,500ml,200ml (DTM,TM,STM).

GHEE 15kg.tin,200ml,500ml,1lt.

Tetra S.F.M Chocolate,badam,pine apple.

BUTTER MILK 200ml.

LASI 200ml.

CURD 100grms,200grms,500grms.

MISTHI DOI 100grms

PANEER 200gr,500gr,1kg.

DOODH PEDA 25gr,250gr.

BURFI 250grms,500grms.

BASUNDHI 50ml.

KALAKAND 1kg, 500grms.

MILK POWDER PLANT

The main dairy has powder plant of 15 tons capacity per day. The plant has been

designed to produce 15000 kgs of milk powder on a 20 hours per day. Evaporation is

done in multiple effect falling film evaporators and powder is manufactured with high

pressure nozzle spray dryer. The water evaporation capacity of the evaporator is 9400

kg per hour and spray dryer is designed to 758 kg per hour. Fluid bed dryer is also

provided.

The dairy is having the facility to convert surplus milk into milk powder

around 150000 per day on average. As we are getting good quality milk from all

chilling centers and best quality of milk powder is produced.

43

MARKETING

MMDPL is having good marketing facility of milk and milk products,

marketing offices at Vijayawada, Chennai, Bangalore and Hyderabad is having good

distribution system. All the marketing executives are professionally trained and

having good skills and experience in marketing products. To maintain cold chain

there are about 35 insulated puff vehicles to transport milk to various towns. There is

tremendous increase in sales of milk and milk products due to best quality, there are

about 3000 outlets in AP, TN and Karnataka. The dairy is catering need of 10 Lakh

customers daily in southern region.

QUALITY ASSURANCE

MMDPL has well maintained laboratories in all their dairies. Technically

qualified staff are looking after testing of milk and milk products. Quality

assurance programs are implemented at every stage to ensure quality of milk

and milk products.

This dairy is an ISO 9001:2000 and an ISO 2000:2005 certified company. The

dairy is following quality management system and food safety standards.

MMDPL is having ISI License and AGMARK License and all other statutory

standards as per requirements.

There is continuous growth is procurement and sales. The capacities of the

plants are also increased to handle the milk and to manufacture milk products.

To meet the demand in market there is also plan to introduce products like cup

curd, lassie in retail markets.

QUALITY POLICY

We are committed to achieve customer satisfaction throughhygienically

processed and packed Milk and Milk Products. Westrive to continually improve the

quality of our products andservices through up gradation of technologies and

systems.Model's soul has always been imbibed with an unwrittenperpetual

commitment to itself, to always produce and providequality products with continuous

efforts to improve the processand environment.

44

Adhering to its moral commitment and its continuous drive to achieve

excellence in quality of Milk, Milk products & Systems, Model has always been

laying emphasis on not only reviewing & re-defining quality standards, but also in

implementing them successfully. All activities of Processing, Quality control,

Purchase, Stores, Marketing and Training have been documented with detailed quality

plans in each of the departments. Today Model feels that the ISO certificate is not

only an epitome of achieved targets, but also a scale to identify & reckon, what is yet

to be achieved on a continuous basis. Though, it is a beginning, Model has initiated

the process of standardizing and adopting similar quality systems at most of its other

plants.

ACHIEVEMENT

Today 6.5 lakh framers are supply milk through 8072 dairy collection centers.

Covering about 12541 villages in the state. The milk procurement has grown to touch

360.8 million liter and sales of milk have touched 310.5 million liters during 2009-10.

Andhra Pradesh has made rapid strides in the past 3 decades and has emerged as a

major milk state. Dairying co-operative has become in instrument of change and

growth in villages.

HR FUNCTIONS

TECHNICAL INPUT ACTIVITIES

Animal health care

Artificial insemination

Feed and fodder activities

TRAINING CENTRE

This union has its own union training center funded by NDDB, to cater the

need of the society personnel and framers various activities.

FINANCE FUNCTIONS

FINANCE AND ACCOUNTS

The financial operation of model dairy in Vijayawada has been increasing

with a remarkable growth rate year by year from 1995-96 to 1999-2000 with all most

double from rupees 25 to 50 lakhs. The purchase price of the milk also been year and

45

this union is also in the habit of passing differential price since 1981 onwards up to

reporting years.

COMPETITORS

1. MODEL MILK

2. JERSEY

3. SANGAM

4. VAISHNAVAI

5. MOTHER

6. THIRUMALA

7. JYOTHI

8. VISHAKA

9. MASQATI

10. MUKUNDA

46

COMPANY PROFILE

MODEL MILK

NAME OF THE COMPANYMODEL MILK PRODUCTS

PVT.LTD.

Address of the Company

Nidamanuru, MODEL DAIRY MILK

Vijayawada - 521104, Andhra Pradesh,

India

Contact Phone:91-866-2842777/2842396

Fax:91-866-2842111

Year of Establishment1994

Type of UnitSmall Scale

Standard CertificationISO 9001:2000

No of Staff 300

47

ORGANIZATIONAL STRUCTURE

BOARD OF DIRECTORS

Mr. .P. DHANU PRAKASH MANAGING DIRECTOR

Mr. P. RATNAKAR ASST.GENERAL MANAGER

Mr.VENKATESH ASST. SALES MANAGER

Mr.RATNA KISHORE ASST.SALES MANAGER

SWOT ASSESSMENT OF MODEL DAIRY

STRENGTHS

48

MANAGING DIRECTOR

PRODUCTION DEPARMENT

SALES DEPARTMENT

PERSONAL DEPARTMENTFINANCE DEPARTMENT

ASST. GENERAL MANAGER

SUPERVISORSENIOR ACCOUNTS OFFICER PRODUCTION

MANAGER

DEPUTY GENERAL MANAGER

JUNIOR ACCOUNTS OFFICER

SENIOR ASST.

PLANT MANAGER

JUNIOR ASST.

MATERIAL MANAGERSALES MANAGERACCOUNTS OFFICER

QUALITY MANAGERCLERICAL STAFFTYPISTSTYPISTS

PROCESSING SUPERVISOR

CLERICAL STAFF

1. Strategically located in the Model

2. Quick availability of raw material

3. Popular brand known from years

4. Milk and milk products are available at competitive prices

5. ability to maintain uniform quality

6. timely delivery

7. new technology implemented for production of milk

8. Model has very good infrastructure

9. Model attends to the complaints of consumers immediately

10. Model pays the highest price for the milk collected from farmers in India and

loyalty among customers for the brand.

WEAKNESS

1. Freezing of marketable area.

2. Lack of flexibility in system.

3. Rivalry among sister unions

4. Government influence

5. Lack of personalize service to channel members

6. High overheads

7. Return are not expected

OPPORTUNITIES

1. Products at affordable prices

2. Your company has set high standards of quality and safety practices,which

gives it an inherent advantage

3. There is also a constant and conscious effort to add further value to the

consumer by offering new products and better quality of services in the

distribution chain.

4. The improvement in the standard of living of consumers and the higher

disposable income has increased the demand for high quality dairy products.

THREATS

49

1. Milk being a perishable commodity demands an efficient cold chain

management

2. Many new process are being developed to improve the quality of milk so

processed and to extend its shelf life

3. Your company is in the forefront of such initiatives in establishing this

infrastructure

4. The industry gas become highly competitive with diverse play.

THEORETICAL FRAME WORK

50

INTRODUCTION

Distribution decisions are critical in nature as they affect the affect the

visibility of the firm and the product. These decisions affect the market share of the

firm and hence great care has to be taken in selecting distribution alternatives

The size and diversity of the Indian market. The heterogeneity is not just on

account of culture and demographic profile of the population but also due to the

infrastructure existing in the country. For example, the following fact sheet on the

Indian market.

Number of towns and cities: 3700

Number of metros: 4

Number of villages: 6, 30,000km

Total length of road: 3,319,644km

Total length of concrete road: 1,517,077km

Rail network: 62,915km

Total no of telecom connections: 18, 95 million

Ratio of the number of retail outlets to the population 5.5outlets 1000persons.

Number of accessible villages: 5, 00,000

This diversity in terms of accessibility of markets today posses a majority

marketing challenge. Increasingly, marketers realize that if they were to make their

brands available in the right size, at the right time, and at the right price, the Indian

consumer can be motivated to buy and consume them

Marketing management

“Marketing management is the process of planning and executing the

conception. Pricing, promotion and distribution of ideas, good and services to create

exchanges that satisfy individual and Organizational objectives.”

Industrial Marketing

“Industrial buyers constitute the largest market of all the purpose volumes of

transactions involved in industrial buying significantly exceeds that of the ultimate

consumer market.”

ROLE OF MIDDLEMEN OR INTERMEDIARIES

51

Besides making the product available to the customer, middlemen perform

several other roles and functions

Information

Middlemen have a role in providing information about the market to the

manufacture .Developments like changes in customer demography, psychographic,

media habits, entry of a new competitor and changes in customer preferences. Since

middlemen are present in the market place and close to the customer, they can provide

this information at no addition cost.

Price Stability

Maintaining price stability in the market is another function a middlemen

performs. The middleman absorbs an increase in the price of the product and

continues to charge the customer the same old price. The middleman also maintains

price stability by keeping his overheads low.

Promotion

Promoting the products in their territory is another function that middlemen

perform. Many of them design their own sales incentives programmer amied at

building customer traffic at their outlets.

Financing

Middlemen finance manufactures operations by providing the necessary

working capital in the form of Advance payments of goods and services. Because it

has to be made even the products are bought, consumed and paid for by the ultimate

consumer.

Titles

Most middlemen take the title of goods, services, and trade in their own name.

This helps in diffusing the risks between the manufacturer and middlemen. This also

enables middlemen to be in physical possessions of the goods, which in return enables

them to meet customer demand at the very moment it arises.

Marketing Flows in Marketing Channels for a Typical Consumer Company

52

Physical flow:

Title flow:

Payment flow:

Information flow:

Promotion flow:

THE NEW ROLE OF INTERMEDIARIES

53

Suppliers of Inputs

Transporter and Warehouses

Manufacturer Transporters and C&F agents or company warehouses

Whole salerTransportersRetailersCustomers

Input Suppliers

Manufacturer Wholesalers or Dealers

Retailers Customers

Suppliers Bank Manufacturer Wholesaler/Dealer

Retailers Customers

Suppliers of Inputs

Transporter and Warehouses and Banks

Manufacturers

Transporter and Warehouses and Banks

Wholesaler/Dealer

Transporter and Warehouses and Banks

Customers Retailers

Suppliers of Inputs

Advertising and agency

Manufacturers

Advertising and agency

Trade Customers

The role of intermediaries is fast undergoing a change. Impact by Internet

and mobile communication technologies, intermediaries find that their conventional

role of selling the goods in their possession and competing on the basis of price does

not hold good anymore .Today , since the customer can access any intermediary

anywhere in the world. Hence the middlemen have to have access to the basis full

range of products and service required by the customer.

CHANGING ROLE OF MIDDLEMEN

Conventional Role Contemporary Role

Transact discrete product or service

Link benefits to produce a superior

customer experience in new “market

space”

Sell what they have, or what is in stock

Access and get to customer the full range

of products and service they need for this

experience

Cut costs to compete on price of products

and services

Get rid of non-value addition activies,

waste, duplication.

Focus on discrete core items Concentrate on value-added services

Gear offerings to average customerPersonalize offering to suit unique

individual needs

TYPES AND NATURE OF MIDDLEMEN

There are three types of middlemen that facilitate the flow of goods and

service from manufacturer to the customer

Merchant Middlemen

These are the intermediaries who take title to the goods and service and sell

them. We know them as dealers, wholesalers, and retailers. These middlemen get

margins and bonuses as compensation. They share the risk with manufacturers when

they take title and physical possession of the goods.

Agents: they help in identifying potential customers and even in negotiations. They

do not share risk with manufacturers as they do not take the title of goods and

54

services. Agents earn a commission and reimburse for all expenses by the

manufacturer.

Facilitators: these are independent business units that facilitate the flow of goods

and services from the producer to the customer without taking a title to them or

negotiation for them on behalf of the producer.

CHANNEL LEVELS

One of the important decisions that firms have to often is

regarding the number of channel levels required to serve a given market. Channel

level represents channel members who have a specific role to play. From as low as

zero ,or in other words, directly from the manufacture to the customer, one can have a

high as 4 to 5 levels involved in distribution . Typically, zero level existing in most

industrial product marketing, particularly in capital equipment.

When the number of customers is high and they are concentrated in

specific geographical areas without any uniform pattern in their order lot size, that is

some buy in small volumes and other in bulk, the firm adopts one channel level of

distribution. Here the firm sells its goods to a whole seller or larger dealer or transfers

them to an agent.

Many a time, as in the case of consumer products, customers are spread all over

the country and the market is large. To reach out to such a vast market, a firm has to

necessary increase the length of the channel and one finds two, three, four levels of

distribution. The Indian market has undergone a significant change with the

emergence of middle-class consumers all over the country. Even in rural markets

there has been an increase in income levels and the demand for branded and package

goods is on the increase, awareness also increase. Traditionally, most firms

transported their goods from the factory to state capital, which had earlier been the

major markets.

Wholesalers would buy their requirements from this point and then redistribute the

goods to different towns. Normally the wholesaler would have his sales force or direct

contact with the some major retailers and would sell through them This often left gaps

in the market as, many a time, the wholesaler would sell to the retailers, not necessary

because of market demand but because the retailer was financially sound and could

pay the whole seller immediately. This obviously implies increase in width of the

channel same level to serve the market.

55

CONSUMER MARKETING CHANNEL

0-Level 1-Level 2-Level 3-Level

A zero level channel contains one selling intermediary, such as a

retailer. A two level channel contains two intermediaries. In consumer

markets, these are typically a wholesaler and a retailer. A three level channel

contains three intermediaries. Om the meat packing industry, as many as six

levels. From the producer point of view, obtaining information about end users

and exercising control become more difficult as the number of channel levels

increases.

INDUSTRIAL MARKETING CHANNELS

56

Manufacturer Manufacturer

ConsumerConsumerConsumer

RetailerRetailerRetailer

Jobber

WholesalerWholesaler

ManufacturerManufacturer

Consumer

0-Level 1-Level 2-Level 3-Level

Channels commonly used in industrial marketing. An industrial goods manufacturer

can use its sales force to sell directly to industrial customers, or it can sell to industrial

distributors, who sell to the industrial customer, or it can sell through manufacturer’s

representatives or its own sales branches directly to industrial customers, or indirectly

to industrial customers through industrial distributors. Zero, one, and two level

marketing channels are quite common.

FACTORS DETERMINING THE LENGTH OF THE CHANNEL

From the above discussion, it may be concluded that following will determine the

length of the channels of distribution.

(a) Size of the Market: The larger the market size , the economical it is to indirectly

serve the market and hence the longer the channel. Conversely the smaller the

market, smaller the channel.

(b) Order Lot Size: If the average order lot size is small, it is better to have a longer

channel than when the average order is in bulk or if a container load is bought.

(c) Service Requirements : If the product and market requires a high level of service

and it is a major factor in buying decision, it is advisable that the keeps a shorter

channel like zero or one level only

57

Manufacturer Manufacturer Manufacturer Manufacturer

Manufacturer’s representative

Manufacturer’s sales branch

Industrial distributors

Industrial customer

Industrial customer

Industrial customer

Industrial customer

(d) Product Variety: If customers shop for an assortment of the products it is

advisable that the firm ensures the availability of its product range at all outlets

selling complementary and substitute products.

FACTORS INFLUENCING DISTRIBUTION DECISIONS

Distribution patterns, channel objectives, and constraints are influenced by a host of

variables .these are.

Market Characteristics

Market characteristics play an influence role on distribution decisions. For

example, if customer wants a high level of service, manufacturers will have to ensure

that its channel members are able to provide it .the latter alternative may be costly but

it may ensure a high level of customer confidence.

Company Characteristics

The next variable is company characteristics and objectives. The channel

design is influenced by the company’s long-term objectives, financial resources,

manufacturing capacity, marketing mix, and even its corporate philosophy.

Product Characteristics

Here the key issues for analysis are product value, perceived risk, nature of the

product. Product value and product risk is high.

Middleman Characteristics

This refers to middlemen’s aptitude for service, promotion, handling ,

storage, contract, and credit. Channel design reflects the strength and weakness of

different intermediaries.

Intensity of Competition:

The nature and intensity of competition in the industry will determine the

distribution pattern by a firm. Some industries have multiple brand outlets.

Environmental characteristics like government policy, statutory provisions ,state of

the economy, technology, infrastructure development also affects.

IDENTIFYING MAJOR DISTRIBUTON ALTERNATIVES

We have mentioned the three distribution alternatives in the preceding

sections, namely intensive, selective, and exclusive.

58

Intensive: This alternative involves all the possible outlets that can be used to

distribute the product. Which is mainly use for soft drink firms? They have multiple

outlets to ensure this easy possible availability to the customer.

Selective Distribution: This alternative helps focus the selling efforts of

manufacturing firms on a few outlets rather than dissipating it over countless marginal

ones. Selective distribution can help the manufacturer gain optimum market coverage

and more control.

Exclusive Distribution: When the firm distributes its brand through just one or two

more outlets in the market who exclusively deal in it and not all competing brands.this

is a common form of distribution in product and brands that seek a high prestigious

image. The firm also hopes to get the benefit of aggressive selling by such outlets.

TERMS AND RESPONSIBILITY OF INTERMEDIARIES

The commercial policy of a manufacturer often lays down the terms and conditions

and responsibility for the intermediaries.

(a) Price Policy: These sets out the price at the middlemen will get the product from

the manufacturers and the discount schedule. It also mention the price at which

middlemen may sell the product.

(b) Payment Terms: The manufacturing firms stipulates the modes and terms of

payment. Others may accept a letter of credit as a mode of payment.

(c) Returns Policy: this indicates the warranty that the manufacturer extends to the

intermediary. Some firms offer spot replacement for any of its products returned

by the customer. Other take time to settle these claims.

(d) Mutual Service and Responsibilities: These should be spelt out clearly,

particularly in the case of franchised and exclusive agency channels.

(e) Territorial Rights: The manufacturer should spell out the territorial jurisdiction

of each of the distributors to avoid any territory jumping. This will also helps in

the distributor’s evaluation.

CRITERIA FOR EVALUATING CHANNEL ALTERNATIVES

59

The channel alternatives have to be evaluated from the point of view of the

cost of distribution, the degree of control of manufacturer gets over the market

through an alternative.

Evolution of Channels

The distribution strategy of any manufacturing firm should

respond to market change. As markets evolve, products nature, and competition

intensifies, the distribution plan of the has to be modified. One cannot assume that a

distribution plan, once evolved, will continue to delivery results for the entire period

of the products life. This is because of changing behavior and characteristics of

customer who adopt the product at different time intervals. While in the introduction

and early growth phase customers are willing to pay any price and go the place to buy

it, at the latter stage of growth and early maturity, customers demand convenience

buy it. But as products enter the latter part of maturity, customers became price and

convenience sensitive. Hence the planning the distribution strategy a firm should

consider value addition by the channel and market growth rate.

High

Market

Growth

Rate

Low

High Low

Value added by channel members

VERTICAL MARKETING SYSTEM

60

Growth

Dedicated Stores:

Computer Stores

Shopper’s Stop

Mature

Department Stores

like Akbarallys

Introductory

Specialist Channels like

boutiques in fashion/

designer wear

Decline

Discount Stores

Low cost alternatives

like “Discount Sales”

Often one finds that the manufacturers, wholesalers, retailers are locked in an

unproductive conflict. These is because each of them conventionally acts as

independent business units pursuing a profit goal even though, at a time , it may work

against the others. the vertical marketing systems achieves economies of scale through

their size, bargaining power, and eliminating of duplicates services.

TYPES OF VERTICAL MARKETING SYSTEMS

(i)Corporate Vertical Marketing Systems: In this successive stages from

production to distribution are under single ownership of any of the channel members.

Vertical integration is achieved through forward or backward integration.

(ii)Administered VMS: Unlike the corporate VMS administered VMS seeks to

control successive stage from production to distribution not through ownership but

through the size and power of one of the channel member like brand leaders.

(iii)Contractual VMS: This consists of independent firms at different levels of

production and distribution integrating their programs on a contractual basis to

obtained larger economies of scale and sales impact than they could achieve alone.

Some are voluntary chains.

HORIZONTAL MARKETING SYSTEMS

Another contemporary marketing system that challenges the conventional one is this.

It reflects the readiness of two or more non-related companies to put together

resources to exploit an emerging market opportunity.

Multichannel Marketing System

Lately, firms have been realizing that one single system or channel system is not

always able to deliver the desired results. For one, Indian market has grown

dramatically over the last one decade with the emergency of the middle class, working

couples, and single child families. This growth is not just restricted to metros but has

spread across the country to every towns and rural areas. In this multiple channels are

using.

MANAGING THE CHANNEL

61

Just as no single distribution plan can remain static in the midst of market changes,

channel members expectation also change. At one stage , channel members used to

take pride in mentioned their relationship with well-know nations and multination’s

firms like Godrej, Hindustan Liver and so on. Manufacturing companies today

demand much greater selling efforts from their middlemen. The former also want to

be provide timely market information, more warehouse space, competitive advantage.

Pressure on margins is an inevitable element in an intra channel competition.

CHANNEL CONFLICT

To manage channel conflicts the marketer must understand

(a)The type.

(b)The nature or cause

(c)Magnitude of the conflict.

TYPES OF CONFLICT

In any channel arrangement there can three types of conflict.

(i)The Vertical-level Conflict: Vertical level conflict occurs when the channel

members at one levels is in conflict with another member at the next higher or lower

level.

(ii)Horizontal-level Conflict: Conflict at the same level between channels members

is called horizontal-level conflict .Hence, inter stockiest conflict or conflict at the

retail level among retailers on issue like pricing and territory jumping.

(iii)Multichannel-level Conflict: Sometimes the middlemen come in conflict with

the manufacturer, using both direct and indirect means of distribution. Such a conflict

is called multichannel-level conflict.

NATURE OR CAUSE OF CONFLICT

Channel conflict occurs largely due to financial and non-financial reasons.

(i)Goal Incompatibility: A Major factor causing conflict between manufacturers and

wholesalers is the perceived goal incompatibility between them.

(ii)Role Ambiguity: Many a time conflicts occur because of role ambiguity. This is a

common cause of conflict in multichannel conflict.

(iii)Difference in Perception of the Market: In this and economy may also create a

conflict between the manufacturer and middlemen.

MAGNITUDE OF THE CONFLICT

62

This refers to the seriousness of conflicts. At times the conflict may not be of a

magnitude the magnitude demanding the manufacturer’s attention.

MANAGING THE CONFLICT

To minimize the conflict, the manufacturer may take the following steps:

(a)Communication: An effective way to minimize channel conflicts is to have

regular communication between manufacturers and the channel members.

(b)Dealer Council: this resolves conflict is through formation of dealer councils.

Such resolves horizontal-level and vertical conflicts.

(c)Super ordinate Goals: this gives of maximum customer satisfaction. If the

channel members can be motivated to perceive customer satisfaction as the ultimate

goal of all members in the channel and leads to gain profits.

(d)Arbitration and Mediation: this gives resolved through arbitration and

mediation. Generally in intramiddlemen conflicts horizontally or vertically.

MOTIVATIG CHANNEL MEMBERS

Another major challenge to marketer today is to keep channel member motivated so

that they give their best performance. Financial rewards like including higher

margins, extended credit time, bonuses, and reimbursement of expenses. While non-

financial rewards include contests, public recognition, paid holidays and training.

Through these activates we can motivate the channel members.

PLINNING A MARKET DRIVEN DISTRIBUTION SYSTEM

In any market situation, if the distribution system of a firm is not customer focused or

market driven, it risks losing its market share. Louis Western and Frederic

D.Sturidvant suggested in eight step process.

1. Knowwhat Customers Want: in this service can categorized in five groups.

(a) Lot size

(b) Market decentralization.

(c)Waiting time.

(d)Product variety.

(e)Service backup.

2. Decide on the Outlet: the marketer can develop clusters or segment that value

different service in particular way and whose prioritization of service is similar.

3. Determine the costs: Once the alternative has been selected, the market should

now detriment the costs will be. This help of either in house corporate executives or

outside the professions. They also determine link suppliers.

63

4. Bind the Ideal: ideal alternative should tested agnist

(a) Efficiency in costs, revenue, profits.

(b) Effectiveness, especially in market share.

(c) Adaptability or ability of capital invested to accept new products.

5. Compare the Alternatives: one must compare these alternatives with the existing

one on parameters like function performed by various channel participants. Costs and

discounts.

6. Review Assumption in the Light of Research

7. Comfort the Gap between the “Ideal” and the Actual Distribution System

8. Implementing Change in the System, if Required.

CHANNELS OF DISTRIBUTION WITH REFERENCE TO MODEL DAIRY

CHANNELS OF DISTRIBUTION

MILK

Door delivery

Manufacturer Retailer/agent Customer

A set of the interdependent organizations involved in the process of market a product

or services available for use of consumption by the consumer or business user.

According to bucking, a distribution channel consists or the set of the people and

firms involved in the transfer of the title to a product moved from producer to ultimate

consumer or business user.

FUNCTIONS OF DISTRIBUTION CHANNEL:

64

Manufacturer

Door delivery

CustomerRetailer/agent

A distribution channel moves goods from producer to consumer. It overcomes the

major time, place and procession gaps that separate goods and services from those

who use them.

Members of marketing channel perform many key functions such as gathering

information, developing promotion, increasing contact, matching the buyer’s needs

negotiation, physical distribution, financing and risk taking of the channel work.

MILK PRODUCTS:

NUMBER OF CHANNEL LEVELS

The number of channel levels can channelize marketing channel. Each layer of

marketing intermediaries performs some work in bringing the product and ownership

closure to the final buyer is a channel level. Each middleman that perform some work

they are part of every channel.

Direct market channel: A marketing channel alternatives and decided on the

best channel design, it must implement and manage the chosen channel. The channel

manager calls for selecting and motivating individual channel member and evaluating

their performance overtime. The various alternative which a company has in

distribution channel, can be understood from the below tables.

CUSTOIMER MARKETING CHANNEL:

65

Manufact RetailerStockiest Consumer

SOME OF THE IMPORTANCE OF THE CHANNELS OF DISTRIBUTION:

1. Channel provide distribution efficiency to manufacture.

2. Channel supply products in required assortments.

3. Channel provider salesmanship.

4. Channel help merchandise the product.

5. Channel help implement the prise merchandise.

6. Channel look after physical distribution and financing function.

7. Channel of distribution of intermediaries, channel design, location, of

outlets, channel remuneration and dealers principal relation

8. Physical distribution transportation warehousing, inventor level, order

Processing, etc.

CHANNEL 1

In this channel the milk distribution to the consumer through the commission

agents. These commission agents are playing vital role in the sales of Model dairy.

This channel is the most important channel maximum of sales is being achieved

through this channel. This is the easiest channel through which consumer can acquire

66

Plant

Commission

Consumer

Delivery Boys

the milk. This commission agent in turn appoints delivery boys for supply to

consumer. This is the easiest channel where goods will be delivered directly to the

consumer through dairy vans in time. I.e. both morning and evening. This facility

makes commission agents comfortable and motivated. Even cash is collected at the

points of booths.

CHANNEL 2

This channel includes retailer where the other products like butter milk, Doodah

peda,

Lassi, Flavored milk, Ghee, etc..... which are being manufactured by the Model

dairy are being sold.

A retailer is a person who sells ultimate customers. In case of Model

dairy at some of the areas from where every customer can buy dairy pros. The

organization itself established retail shop and employed its own people. It has

also given this retailer shop even to the outsiders. In these retail outlets

customers can get milk products other than milk like ghee, flavored milk, doodh

peda, etc.,

CHANNEL 3

67

Model Dairy

Retailer

Customer

In fact this cannot be considered as a channel because there are no intermediaries

between the organizations. Hence the customers are in direct contact with the dairy.

They give order for the special occasion to dairy; these orders will be met on time by

Model dairy personnel. The customer can book directly to the organization or they

can even book through booth agents. The hotels, restaurant and other sweet merchants

use even this channel. There will be direct contact between the customer and Model

dairy. The transaction purchasing will be only through marketing department. This

channel can also be considered as the zero level channels where the manufacturer is

directly selling to the consumer. This is also kind of direct marketingchannel to the

products like milk etc.,

This type of channel is very useful where the consumer can directly be in contact with

the producer.

CHANNEL 4

68

Model Dairy

Stockiest

Retailer Consumer

Model Dairy

Customer

Model dairy has recently gone for this channel of distribution. This channel

consists of stockiest who are equivalent to the dealer. Designing of the channel is not

a day to day task in the channel management. It is the administration of the dealer

network that constitutes an everyday task in channel management. These stockiest

were invited by the organization through the news paper ads.

LOCAL MILK MARKETING

Vijayawada city having of about 8 lakh including the nearby sub urban. To

cater the needs of the consumer in Vijayawada city and also in the important towns of

Kondapalli, Gannavaram, Ibrahimpatnam, Mangalagiri, Guntur and Machilipatnam

milk is being supplied in sachets as indicated here under.

1 Is your opinion about the present distribution channel of model dairy?

69

TABLE: 1

Present Distribution Channel No. Of Agents % of Agents

Excellent 18 11.5

Good 118 76

Satisfactory 19 12.5

FIGURE:1

Excellent Good Satisfactory0

20

40

60

80

100

120

140

18

118

1911.5

76

12.5

No. Of Agents% of Agents

Interpretation

From the above 76% of retailers are saying that the distribution channel of

model dairy is good. 12.5% of retailers are saying that the distribution channel of

model dairy is satisfactory and 11.5% of retailers are saying that the distribution

channel of model dairy is excellent.

Majority of retailers are saying that the distribution channel of model dairy is

good. Because model dairy provide different channels of distribution, so many

retailers show interest towards model dairy produce

2 Monthly incomes of a dealer and distributor through model dairy products?

70

TABLE: 2

Monthly Income No.Of Agents % of Agents

Up to 5000 103 66.5

6000 24 15.5

8000 19 12.5

10000 9 5.5

FIGURE:2

1 2 3 40

2000

4000

6000

8000

10000

12000

0

6000

8000

10000

66.5 15.5 12.5 5.5

Monthly IncomeNo.Of Agents% of Agents

Interpretation

From the above table, it is being observed that the majority of respondents 66.5%

under monthly income up to Rs.5000, 15.5% respondent’s income between the

monthly income of Rs.6000. 12.5% respondents income between the monthly income

of Rs.8000 and then only 5.5% respondents monthly income above Rs.10000.

3. How is the quality of model dairy milk products?

71

TABLE: 3

Quality No.of Agents % of Agents

Good 107 69

Satisfactory 44 28.5

Poor 4 2.5

FIGURE:3

Good Satisfactory Poor0

20

40

60

80

100

120107

44

4

69

28.5

2.5

No.of Agents% of Agents

Interpretation

From the above table, 69% of retailers saying that model dairy milk and milk

products are in good quality, and 28.5% of retailers says that model dairy milk is

satisfactory, and 2.5% of retailers say it is poor in quality of milk and milk products.

Majority of retailers saying that model dairy milk and milk products quality is good,

so model dairy produce good quality of milk and milk products.

72

4. Are you satisfied with the commission offered by model dairy to sell their

products?

TABLE:4

Commission No. Of Agents % of Agents

Yes 98 63.5

No 57 36.5

FIGURE:4

No. Of Agents % of Agents0

20

40

60

80

100

120

98

63.557

36.5

YesNo

Interpretation

From the above table, it is observed that 63.5% of the retailers are satisfied

with commission offered by model dairy. And also 36.5% agents do not satisfied with

the commission offered by model dairy. The majority of retailers (63.5%) are satisfied

with commission.

73

5.Why people prefer model dairy milk ?

TABLE:5

People Prefer No.Of Agents % of Agents

24hrs availability 5 3

Competitive Price 38 24.5

Prompt and easy delivery 122 72.5

Attractive Packing 0 0

FIGURE:5

24hrs availability

Competitive Price

Prompt and easy delivery

Attractive Packing

0

20

40

60

80

100

120

140

5

38

122

03

24.5

72.5

0

No.Of Agents% of Agents

Interpretation

From the above table , it is evident that 72% of customer prefer dairy milk

because pompt and easy delivery , 24.5% of customer prefer model dairy milk

because of the competitive price, 3% of customers prefer 24hours availability .

74

6.How do you place an order for the stock?

TABLE:6

Order for Stock No.Of Customers % of Customers

Over Through Phone 52 33.5

Send a Phone 0 0

Through Sales Vechicles 0 0

Representative Of Model Collects the indent 103 66.5

FIGURE:6

Over T

hrough

Phone

Send a

Phone

Thro

ugh Sa

les Vech

icles

Repres

entati

ve O

f Model

Collects

the i

ndent

020406080

100120

52

0 0

103

33.5

0 0

66.5

No.Of Customers% of Customers

Interpretation

From the above table, 66.5% of retailers said that representative of model

dairy collects the indent, and 33.5% over through phone , most of the people directly

representative of model dairy collects the indent.

75

7.How fast do you get the stock?

TABLE:7

Get the Stock No.Of Customers % of Customers

Same Day 151 97.5

Immediately receipt of the day 4 2.5

After 1 day 0 0

After 2 days 0 0

FIGURE:7

1 2 3 40

20

40

60

80

100

120

140

160151

4 0 0

97.5

2.5 0 0

Get the StockNo.Of Customers% of Customers

Interpretation

From the above table evident that 97.5% of retailers said that they get stock on

same day, while 2.5% of retailers said that immediate receipt of the day .with the help

of my observation I found that the retailers are more interested to sell Model dairy

products because of the fast delivery offered by the model dairy.

76

8. Which product has a minimum sale?

TABLE:8

Maximum Sale No.of Customers % of Customers

Milk 103 66.5

Butter Milk 2 1

Curd 33 21

Lassi 1 0.5

Other products 16 11

FIGURE:8

Milk Butter Milk Curd Lassi Other products

0

20

40

60

80

100

120

103

2

33

1

16

66.5

1

21

0.5

11

No.of Customers% of Customers

Interpretation

From the sales analysis of model dairy products shows that 66.5% of

customers buying UHT MILK, 21% buy curd and 11% buy other products ,

buttermilk 1% and finally lassie 0.5%. with the help of sales data we can evaluate the

model dairy milk customers are than the other milk related products. In those milk

related by products also curd is in the next position of sales.

77

9.please specify the price of the milk that consumers can attract?

TABLE:9

Price per Litre No.of Customers % of Customers

Rs. 28 3 2

Rs. 26 2 1

Rs. 30 30 19

Rs. 38 120 78

FIGURE:9

Rs. 28 Rs. 26 Rs. 30 Rs. 380

20

40

60

80

100

120

140

3 2

30

120

2 1

19

78

No.of Customers% of Customers

Interpretation

I was found that 78% of the people were buying the milk per liter for the cost

of Rs.38, 19% of people were buying the milk for the cost per liter for Rs.30. and

other of the people were buying the milk cost per liter for Rs 28 and only 1% of the

people were buying the milk per litre for Rs26 . so majority of the people were buying

the milk for Rs38. (with my observed the people are purchasing full cream milk &

next prefer for the people is economy price milk.)

78

10.Are you selling other milk and milk products?

TABLE:10

Selling Other Milk Products No.Of Agents % of Agents

Yes 38 24.5

No 117 75.5

FIGURE:10

No.Of Agents % of Agents0

20

40

60

80

100

120

140

38

24.5

117

75.5YesNo

Interpretation

From the above table I observed that the maximum % i.e.., 75.5% of the

agents are not selling other milk and milk products and 24.5% of the agents are selling

other milk and also the Model dairy milk& milk products .Even though the

competition is high in the market then also the agents are prefer to sell Model dairy

milk and milk products.

79

11.Have you face any problem with products if model dairy?

TABLE:11

Face any problem No.of Agents % of Agents

Yes 17 11

No 138 89

FIGURE:11

No.of Agents % of Agents0

20

40

60

80

100

120

140

160

1711

138

89YesNo

Interpretation

I was observed that 11% of the agents facing the problem , and 89% of the

agents did not face any problem(with Model diary products) . Because the model

dairy provide all specialties for the dealer and distributors.

80

12. What is your opinion about the price of model milk and milk products ?

TABLE:12

Price No.Of Agents % of Agents

High 20 13

Reasonable 133 86

Low 2 1

FIGURE:12

High Reasonable Low0

20

40

60

80

100

120

140

20

133

213

86

1

No.Of Agents% of Agents

Interpretation

I was observed that 86% of the people were saying reasonable price. 13% of

the people were saying that milk and milk products are very high. 1% of the people

were saying that milk and milk products are low.

81

13. How long have you been using these model milk and milk products ?

TABLE:13

Years No.Of Agents % of Agents

10 44 28.5

5 54 35

3 19 12.5

2 39 24

FIGURE:13

1 2 3 40

10

20

30

40

50

60

10

53 2

44

54

19

39

28.5

35

12.5

24

YearsNo.Of Agents% of Agents

Interpretation

With the help of my study I found that 35% of the people were using model

dairy products since five years, 28% of the people were saying that using ten years,

24% are using two years, and 12.5% are using from three years. The people are very

loyal to the Model dairy products.

14. Which factor do you consider to selling model milk and milk products?

82

TABLE:14

Factors No.Of Agents % of Agents

Quality 90 58

Service 18 11.5

Commission 45 29

No Leakage and Spoilage 2 1.5

FIGURE:14

Quality Service Commission No Leakage and Spoilage

0

10

20

30

40

50

60

70

80

90

10090

18

45

2

58

11.5

29

1.5

No.Of Agents% of Agents

Interpretation

I was observed that 58% of the people were saying based on the quality, 29%

of the people were saying that commission, 11% are saying based on service, and

1.5% are saying that there is no leakage and spoilage. so the people are very happy

about the quality parameters maintained by the Model dairy.

83

15. Are you satisfied with the service offered by the model dairy?

TABLE:15

Service Offered No.Of Agents % of Agents

Yes 133 86

No 22 14

FIGURE:15

No.Of Agents % of Agents0

20

40

60

80

100

120

140 133

86

2214

YesNo

Interpretation

I was observed that 86% of the people were saying that they are satisfied and

remaining 14% of the people were saying that they are not satisfied. In that also the

people who are satisfied because of the quality maintenance, delivery system(proper

distribution channel),services and all are available at reasonable price.

FINDINGS

84

Majority of Retailers are saying that the distribution channel of Model Dairy is

good

Observed that the majority of respondents 66% under monthly income up to

5000.

The 69% of distributers saying that Model Dairy milk & milk products is

good quality.

The majority of retailers are satisfied with commission.

Agents are evident that 72% of customers prefer Dairy Milk because prompt

& easy delivery.

Evident that 97% of retailers said that they get stock on same day.

I was observed that 35% of the agents using these Model Milk & Milk

products from past 5years.

Factors that consider to selling Model Milk & Milk products by agents as

based on quality.

SUGGESTIONS

85

Maintain good relationship with loyal customers for business extension

of Model Dairy.

Concentrate on By-Products to get the effective market share in giving

the competition with other Dairy Milk companies.

Provide sophisticated commission to agents.

Solve the complaints of dealers with in the short span of time.

Use the effective Advertisement about the Model Milk & Milk

products.

CONCLUSION

86

Model Dairy has a competitive advantage when it comes to its distribution

and logistics procedure because the company has been able to mobilize every resource

it has to efficiently distribution its products. Model Dairy clearly understand its

competitive advantage in being so big whose operations is of large scale and has used

it to gain favorable edge in the competitive .

Model Dairy have embarked on a multi varied marketing campaign that

extends and distribution channel. The successful ongoing marketing it in corporate

media advertisement, community partnership , innovative packing design and

interactive digital engagement through the internet and new media channels.

From the entire project work the Model Dairy company good brand image in

the Vijayawada city. The Model Dairy distribution channel minting good channels

starters avoiding shortly of products all forms of retailers and these company

operating own outlets to grab more market share.

BIBILOGRAPHY

87

S.NO

TITLE OF THE BOOK

AUTHOR PUBLISHER EDITION

1 Marketing management

P.Kotler & K.Keller

Himalaya publications

12th Edition.

2 Marketing channels

Louis w.stern

Prentice hall of India

5th Edition

3 Marketing Management

Rajan Saxena

Mc.Graw-Hill 3rd Edition

NEWS PAPERS

The Hindu

Business Line

MAGAZINES

Business Line

Business World

Frontline

WEBSITES

www.nabard.org

www.nddb.org

www.modeldairyfarm.com

www.ffymag.com

pQUESTIONARY TO THE BOOTH AGENTS

88

NAME :

PLACE :

BOOTH NUMBER :

QUESTIOS

1) Is your opinion about the present distribution channel of Model Dairy ( )

a. Excellent.

b. Good.c.Satisfctory.

2) Monthly Income of a dealer and distributer through Model Dairy products ( )

a. Rs.5000/-

b. Rs.6000/-

c. Rs.8000/-

d.Rs.10000/

3) How is the quality of Model Dairy products ( )

a. Good.

b. Satisfactory.

c. Poor.

4) Are you satisfied with the commission offered by Model Dairy to sell their products ( ).

a. Yes.

b. No.

5) Why people prefer Model Dairy milk. ( ).

a. 24 hrs Availability.

b. Competitive price.

c. Prompt easy delivery.

d. Attractive packing.

6) How do you place an order for the stock ( ).

89

a. Over through phone.

b. Send a person.

c. Through sales vehicle.

d. Representative of Model collects the indent.

7) How fast do you get the stock? ( ).

a. Same day.

b.Immeditaly receipt of the day.

c. After one day.

d. After two days.

8) Which product has a maximum sale ( ).

a. Milk.

b. Butter milk.

c. Curd.

d. Lassie.

e. Other products.

9) Please the specify the price of the milk that consumer an attract ( ).

a. Rs.28/-

b. Rs.26/-

c. Rs.30/-

d.Rs.38/-

10) Are you selling others milk and milk products ( ).

a. Yes.

b. No.

11) Have you faced any problems with products of Model Dairy( )

a. Yes.

b. No.

12) What is your opinion about the price of Model milk and milk products? ( ).

90

a. High.

b. Reasonable.

c. Low.

13) How long has you been using these Model milk and milk products ( ).

a.10 years.

b. 5 years.

c. 3 years.

d. 2 years.

14) Which factor do you consider to selling Model milk and milk products.( ).

a. Quality.

b. Service.

c. Commission.

d. No leakage and spoilage.

15) Are you satisfied with the service offered by Model Dairy ( ).

a. Yes

b. No

91