Implementation of
Marketing Plan for KMF
and its affiliated milk
unions
By: Pankaj Singh
Faculty: Prof. V. Shidhar
Karnataka Milk Situation (MMT)
Share
Year Karnataka India
(%)
2014-15 6.1 146.3 4.2
2015-16 6.3 155.5 4.1
2016-17 6.6 165.4 4.0
2017-18 7.1 176.3 4.0
2018-19 7.9 187.7 4.2
South Karnataka North Karnataka
Buffalo Milk
10%
Buffalo
Cow Milk Milk Cow Milk
90% 41% 59%
Region Cow Buffalo Total
South Karnataka 3.16 0.36 3.54
(% to Total) (45%) (5%) (50%)
North Karnataka 2.05 1.43 3.47
(% to Total) (29%) (20%) (50%)
Total Karnataka 5.21 1.80 7.01
(% to Total) (74%) (26%) (100%)
KMF Milk Procurement (2018-19)
District-wise procurement vs Surplus
Milk Production (LKgPD) 216
Milk Surplus (LKgPD) 155
Milk Procurement (LKgPD) 75
Procurement Over Surplus (%) 48
• Private Procurement is about 10 LKgPD
• Major private player includes Hatsun,
Dodla, Heritage & Aditya etc
Procurement vs Sales performance
• 14 Milk Unions and Mother Dairy covers 30
districts,
• Covers 25 lakh farmers & 16000 DCS
• Milk procurement growing at a CAGR of 6.3% in the
past 5 years
• Sales growth in last 5 years is only about 1.9%
Procurement Sale
Union
(LKgPD) (LLPD)
Bengaluru 15.46 8.92
Kolar 10.09 3.05
Mysore 7.45 2.49
Mandya 8.31 2.59
Tumkur 6.70 3.12
Hassan 8.33 1.96
Dharwad 2.40 0.87
Belgaum 2.11 0.76
Bijapur 1.75 0.66
Gulbarga 0.64 0.51
DK 4.37 3.40
Shimoga 5.14 1.99
Raichur Bellary 1.78 1.10
Mother Dairy - 3.47
Total 74.52 34.89
Milk Procurement vs Sale
Milk procurement (LKgPD) Milk Sale (LLPD)
80
70
60
50
40
30
20
2014-15 2015-16 2016-17 2017-18 2018-19
Sl. Milk procurement Milk Sale
Year
No (LKgPD) (LLPD)
1 2014-15 58.60 32.20
2 2015-16 65.00 33.40
3 2016-17 65.50 34.01
4 2017-18 70.80 34.50
5 2018-19 74.80 34.80
Growth (%) 6.30 1.90
Dairy Infrastructure - KMF
Cheese PLant
Powder Plant
Milk Utilization- KMF
UHT plant Mandya
Details LKgPD
Procurement 75
Milk in Polyfilm 35
Conversion
Curd 5 16%
UHT 6
Bulk sale Milk in
WMP 8
11% Polyfilm
Other Products 1 47%
Other Products
Bulk sale 8 1%
WMP
Conversion 12
11%
UHT Curd
8% 7%
Consumer Product Sale and Producer’s Price
Milk used
Total milk & % of milk &
Procurement for Producer's
Union Sale (LPD) milk product milk product
(LKgPD) Products price (Rs/l)
sale (LLPD) sold (%)
(LPD)
Bengaluru 15.46 8.92 1.29 10.22 66% 24.78
Kolar 10.09 3.05 3.10 6.15 61% 23.84
Mysore 7.45 2.49 0.98 3.47 47% 23.98
Mandya 8.31 2.59 1.12 3.72 45% 22.25
Tumkur 6.70 3.12 0.47 3.59 54% 24.94
Hassan 8.33 1.96 1.51 3.47 42% 23.60
Dharwad 2.40 0.87 0.12 0.99 41% 23.04
Belgaum 2.11 0.76 0.09 0.85 40% 21.88
Bijapur 1.75 0.66 0.10 0.76 43% 22.75
Gulbarga 0.64 0.51 0.07 0.58 92% 25.90
DK 4.37 3.40 0.83 4.23 97% 29.81
Shimoga 5.14 1.99 0.27 2.26 44% 23.87
Raichur Bellary 1.78 1.10 0.06 1.16 65% 24.70
Mother Dairy - 3.47 2.00 5.47 - -
Total 74.52 34.89 12.02 46.91 -
32.00
Proportion of sale of consumer
30.00
product Correlation
Correlation
Producer Price
28.00
Co-efficient
26.00 Co-efficient
24.00
0.8793
22.00 0.8793
20.00
25% 35% 45% 55% 65% 75% 85% 95% 105%
Proportion of Consumer Product to Milk Procurement
Production Capacity and Sale
Sale
Sl.
Products Unit Capacity CAGR#
No 2018-19 2023-24
1 Milk in polyfilm sachets LLPD 85.3 34.8 48.9 7.0
2 UHT milk - all variants TLPD 1400 590 1298 17.0
3 Flavoured milk TLPD 7.5 11.2** 90.0 52.3
4 Fermented products TLPD 345 426 750 11.8
5 Ice cream TLPD 30 14 28.2 15.0
6 Table Butter MTPD 41 7.6 9.2 3.9
7 Cheese MTPD 40 3.1 30.0 57.5
8 Paneer (packed) MTPD 32 6.7 11.8 12.0
9 Indigenous sweets MTPD 8 7.9 12.7 10.0
10 Ghee in retail packs MTPD 69 51 65.4 5.0
Milk powders in retail
11 MTPD 20 35* 59.3 11.0
packs
*: Co-packing at M/s Sriranga, Bengaluru **: Co-packing at SKA Dairy
#: Dairy India forecast
Strategic framework
for milk marketing for KMF
Porter’s Five forces- KMF
• VC fund and FDI supported dairy
• Startups coming with innovative
Competitive Rivalry products and strategies
• AMUL, PARAG, Heritage, Milky
mist
Threat to New
Entrant • Bring innovation
(medium) Threat to new • New Value preposition
entrant • KMF needs innovation
• Farmer’s represented board
Bargaining Competitive Substitute
power of Bargaining power of • Government support
Rivalry Product
customers supplier • Developed supply chain
(medium) (High) (low)
• Low, as milk as a product is
woven around the socio-
Substitute Product
cultural set up and typical
Bargaining power
of Supplier Indian household
(medium)
• Cost effective and large
Bargaining power of customer base
buyer • Less innovative products
doesn’t create loyalty
BCG Matrix - Choosing Product
• No Star Product (KMF may try
introducing whey based drinks,
Yoghurt)
• ? Products: Cheese and Fl. Milk with
new capacities in place can become
star products
• UHT and curd are cash cow products;
butter has limitations of growth
nationally but is a cash cow product
within Karnataka; Liquid milk has high
market share and is cash cow but has
to find new markets to grow at faster
rate.
• Paneer and Icecream both due to
limited capacities and less demand in
existing market and dominated by
other large players are sleeping dog
Market Mix - Product
• Need to standardize the • Rationalization in production to
products and processes bring economies of scale
• ensure product uniformity in • Work towards improving the shelf
quality and composition life of products.
UHT Milk Flavoured Milk
UHT Milk Flavoured Milk
Cheese Table Butter
Cheese Table Butter
Categories
Product and Market Matrix- KMF
Industry Liquid Milk Traditional VADP Emerging VADP
Dynamix
Products Pouch Milk Curd, Paneer, Cheese, UHT,
Ghee, Butter Whey Protein
Penetration High Medium Low
Pricing Power Low Medium High
• Market Penetration: Old banal products
like pouch milk and curd needs to find areas
in Bengaluru , increase retail points,
assure all time product availability.
• Market Development: KMF should look into
Mumbai, Pune, Hyderabad and NE markets
and new channels eg. Cheese for air tiffin,
UHT for Army supply, fl. milk with 5 lakh
PET bottling plant daily to newer areas.
• Product Development: Icecream needs
quality and product range ; Paneer needs
quality and product update. New and modern
high capacity machinery.
• Diversification : Whey powder from cheese
plant can be used to develop new whey based
beverage, set bucket curd for new channels
and better handling and sweet yoghurt for
new market in north and young segment.
Nandini Product Positioning
Market Mix - Price
Toned Milk Standarized
State Brand
(Rs/lt) Milk (Rs/lt)
Karnataka Nandini 38.00 43.00
Kerala Milma 46.00 48.00
AP Vijaya 46.00 50.00
Tamil Nadu Aavin 42.00 47.00
Delhi Mother Dairy 45.00 47.00
Delhi Amul 46.00 50.00
Maharashtra Mother Dairy 45.00 45.00
Company Toned Milk Standarized
Brand
Name (Rs/lt) Milk (Rs/lt)
Hatsun Agro Arokya 44.00 52.00
Dodla Dairy Dodla 44.00 52.00
Heritage Heritage 44.00 50.00
• Progressively move towards prices • Increase prices of pouch milk
offered by competition for comparable where KMF is market leader
products. (Karnataka)
Market Mix - Price
• Increase margins to offer discounts in retail channels which is a
common industry / trade practice.
Sl. % Margin % Margin
Products
No (Nandini) (Private)
1 Pasteurized liquid milk in sachets 5 10-12
2 UHT milk - all variants and pack sizes 5-6 5-6
3 Flavoured milk 20 25
4 Fermented products 8 10-12
5 Ice cream 24 28-30
6 Table Butter 10 15
7 Cheese 16-20 9-20
8 Paneer (packed) 8 10-12
9 Indigenous sweets 8 15
10 Ghee in retail packs 8 15
11 Milk Powder in retail packs 10 15
Market Mix - Promotion
• Engage professional agency to enhance the visual appeal of brand
‘Nandini’
• Strengthen brand ownership
• Enhanced spending on advertising
• Hire one of the top 5 advertising agencies
• Promote ‘made from cow milk’ as an USP
• Develop a Sub-brand for indigenous milk sweets
• Develop a premium sub-brands
• Deploy Event Marketing that enhances customer experience and
brand loyalty
• Federation should have complete control on brands
