Page 53 - DMGT509_RURAL MARKETING

Rural Marketing

Notes The high-voltage spat between the heads of the two organizations, Dr. Amrita Patel and
Dr Verghese Kurien, had not been constructive at all. In Patel's view, marketing of milk,
and not so much its production, would be the biggest challenge for co-operatives in the
future and that the JVs with other state cooperatives were a step in the right direction. She
felt that such efforts were necessary as there had been a growing gap between milk
production and its marketing. Dr Kurien questioned the NDDB's expertise in marketing
merely on the strength of hiring a couple of hands from MNCs at senior levels even as the
entity, per se, remains unaltered. He was apprehensive that the marketing functions of the
State federations would eventually find their way into the hands of MNCs such as Cadbury
and Nestle. He felt that this amounted to back-door privatization at a time when similar
efforts with PSUs were attracting much deliberation by the policy-makers and the elected
representatives. Vyas also reiterated that the Mother Dairy brand should belong to the
farmers and not to the NDDB, which is a body set up by the Government, adding that just
as the farmers' control on procurement and processing of milk is sacrosanct, so it should
be in the case of marketing. How could the Mother Dairy come and take away only
marketing, the most lucrative part of the milk chain? Likewise, the powers that be at the
National Dairy Development Board (NDDB), the apex body set up in 1965 and declared an
institution of national importance by an Act of Parliament in 1987 for replicating the
success across the country, were convinced that it was only by strengthening the marketing
strength of these co-operative federations that they would survive the onslaught of the
private sector, and had taken upon themselves the onus to do so. As this turf war of the
co-operative brands continued to rage, it could turn out that the MNC brands, which were
otherwise being priced out of the market, would walk away with the Indian cream.
Kurien averred, "It is one thing for the multinationals to want in when the country has
emerged as the world's leading milk producer, but quite another if they are allowed to
walk away with the hard-earned prize of the Indian farmer under the pretext of profitable
marketing of milk and milk products."

Experimentation, coupled with competition and its tussle with NDDB have put the
company in a unique position. The Federation's focus right from the inception has been to
give best quality with latest technology, value-for-money and work on economy-of-
scales. Little wonder then that officials claimed that only one percent of the total expenditure
was spent on advertisements. Revenue growth has been steady. The latest feather in the
cap was doubling of the capacity of the Mother Dairy plant, one of the largest in Asia, in
Gandhinagar. The state-of-the-art project with an initial investment of 110 crore was
upped to 150 crore with the inclusion of ice cream and long life milk processing to its
product range. However, the hitch is that production of raw material is never the same as
converting it into a value added product and then marketing it. The corporate machinery
needed to do both and they are very different from each other.
Questions
1. Is there a problem of absurd assumption of competencies that is being faced by the
company? (We know the raw material, so we know the market!)
2. Is the right kind of brand building emerging through these efforts? How far can you
stretch a brand across categories?

3. In the case of ready-to-eat pizza in particular, is it the execution that failed the
company or the plan to enter value-added services in a big way that caused its
failure? Please analyse the success formula of Amul by understanding the product,
competition, business general and competitive environment. Give your
recommendations for ensuring continued success of the brand.

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