Chapter-1

INTRODUCTION
NEED FOR THE STUDY
OBJECTIVES OF THE STUDY
METHODOLOGY
LIMITATIONS

INTRODUCTION
The value of milk and milk products for physical development and well being of people is
universally recognized. There was a rapid demand for the milk and its products particularly in
urban areas where these products were not produced in large quantity. In Andhra Pradesh the
program of dairy industry was initially mooted with the milk producers have been faced with
a lot of problems on the process of production and marketing of milk namely improper
transport facility, poor technology, absence of organized system of processing marketing and

pricing. To handle all these problems the government of Andhra Pradesh has viewed to
constitute Dairy Development Corporation.
The main aim to constitute Dairy Development Corporation is to safe guard the interest of
milk producers and ensuring adequate supply of milk at reasonable price to the urban
consumers. As a result, the A.P.D.D.C.F came into existence on 2 nd April 1974. India with a
vast population has great problem in providing every one with adequate food, both in terms
of quality and quantity.
Most of the regions in the country are facing a critical problem i.e., lack of adequate nutrition.
Nutrition and malnutrition products as the most important source of nourishment one of the
advantages is that with the dairy industry is providing employment opportunities, income to
the economy and supplying of qualitative milk and milk products to the country. Dairy
farming one a subsidiary occupation and a means of bare subsistence in rural areas is now an
important agro business. The very essential and important aspect is that to develop diary
industry for overcoming the problems of income, unemployment and nutrition in the country.

NEED OF THE STUDY

Keeping in view, the private dairies operation in Vizag district milk market a
thorough study is also

Visakha dairy has a very good image of supplying good

quality of milk at reasonable price to the consumers. It has a hugged turnover and profits and
some other reason gave birth to many privates dairies .as Visakha dairy occupies a very
important place in our state , a through survey is made to know about the consumer
awareness there , attitudes toward all the dairy products.
The purpose of production is consumption and ones own purpose will be served
only if the consumer interests are attended to quality of service rendered by VISAKHA
DAIRY 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, identify

the possible source of dissatisfaction, work toward handing complaints from consumer,
which in turn help in enhancing customer satisfaction and prevent dissatisfaction.
made to know about the distribution of the products on Visakha dairy. Which include a study
of various factors includes process, quality, availability, packaging, taste usage time and so
on..

OBJECTIVES OF THE STUDY

This study was conducted with an objective of getting an insight of present market share
achieved and steps taken to maintain it in Vizag and in adjacent areas. This study emphasize
on the market strategy developed in order to meet the developing challenge in the market
another important objective of this study conduct is to know and understand the penetration
of Visakha dairy in Vizag and the suburbs as compared to others.

To study the channels of distribution towards Visakha dairy milk and its products.
To find out the product wise demand toward Visakha dairy milk products.
To identify the features that influences the customer for selecting their milk vendor.
To study the brand wise demand for the various of milk and milk products

RESEARCH METHODOLOGY
Sample size: 150 (distribution are taken as the sample)
Sampling technique: Census survey
Fact expressed in quantitative from can be termed as data. Data may be classified either as
primary data or secondary data
Primary data:
The primary data is the data that is generated by the researcher for the specific purpose of
research situation at hand. It is the first hand information that researcher gets from various
source like respondents, analogues case situation and research experiments or
The primary data has been collected from the distribution by supplying them the
questionnaire.
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, research agencies etc.. In this case the secondary
information was collected from newspaper like business line and business magazines like
business today and internet.

Sources 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.
Although 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.
Most of the data and figures were collected from the record of the company. In fact
the above collected data was not enough so there was need of primary source of data. So the
primary data involved data collected from few milk booths and from few consumers
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 Visakha dairy.
Data regarding the highest selling product.
Data regarding the contribution of each product toward sales.
Data regarding total sales and market shares of Visakha dairy.
Data regarding effect of promotional activity done by Visakha dairy.
Data regarding the consumer presumption about quality of milk availability of the product
and price of the product.
data about Visakha dairy and competitors share in the market

The questionnaire was prepared by us under the guidance of the marketing manager of the
Visakha dairy. Although most of the questionnaires were useful but some of the questions
were not answered properly. Some question like high recall rate and question regarding
promotional activity were not answered properly, perhaps the consumer had never though
with that concern and interest.

LIMITATIONS

In spite of honest and sincere efforts by the researched 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 limitations felt and
faced are;
The whole research study was carried out in Vizag only .therefore the result may not be same
in zonal basis.
It was very difficult to generalize the main finding as the sample size was very small.
Some of the finding have been taken in the research are based on opinion, attitudes, feelings,
and perceptions its few respondents .so we cannot take for granted the opinions and
presumption of the entire consumer.
The major limitation in this research study is lack of co-operation from few department heads
due to probably lack of time.

The research had to visit number of time to obtain required data

Chapter-2
INDUSTRY PROFILE

INTRODUCTION
Milk is the food, which contains vitamins, proteins, fats and carbohydrates. Every human
being consumes milk at one time or more. World Health Organization suggests that the
infants should be fed compulsorily with mother milk, because it provides all the necessary
fats, proteins, etc., which is essential for the growth of the baby. If mother feed is not
available they suggest animal milk, this shows what major role milk is laying in our daily
life.
HISTORY
Dairy farming has been part of agriculture for thousands of years. Historically it has been one
part of small, diverse farms. In the last century or so larger farms doing only dairy production
has emerged. Large scale dairy farming is only viable where either a large amount of milk is
required for production of more durable dairy products such as cheese , or there is a
substantial market of people with cash to buy milk, but no cows of their own.
HAND-MILKING
Centralized dairy farming as we understand it primarily developed around villages and cities,
where residents were unable to have cows of their own due to a lack of grazing land. Near the
town, farmers could make some extra money on the side by having additional animals and

selling the milk in town. The dairy farmers would fill barrels with milk in the morning and
bring it to market on a wagon.

Until the late 1800s, the milking of the cow was done by hand. In the United States, several
large dairy operations existed in some northeastern states and in the west that involved as
many as several hundred cows, but an individual milker could not be expected to milk more
than a dozen cows a day. Smaller operations predominated.
VACCUM BUCKET MILKING
The first milking machines were an extension of the traditional milk pail. The early milker
device fit on top of a regular milk pail and sat on the floor under the cow. Following each
cow being milked, the bucket would be dumped into a holding tank. This developed into the
Surge hanging milker. Prior to milking a cow, a large wide leather strap called a surcingle
was put around the cow, across the cow's lower back. The milker device and collection tank
hung underneath the cow from the strap. This innovation allowed the cow to move around
naturally during the milking process rather than having to stand perfectly still over a bucket
on the floor.
STEP SAVER MILK TRANSPORT
As herd size began to increase, the bucket milker system became laborious. A vacuum milktransport system known as the Step-Saver was developed to transport milk to the storage
tank. The system used a long vacuum hose coiled around a receiver cart, and connected to a
vacuum-breaker device in the milk house, allowing farmers to milk many cows without the
necessity of walking increasingly longer distances carrying heavy buckets of milk.
MILKING PIPELINE
The next innovation in automatic milking was the milk pipeline. This uses a permanent milkreturn pipe and a second vacuum pipe that encircles the barn or milking parlor above the rows
of cows, with quick-seal entry ports above each cow. By eliminating the need for the milk

container, the milking device shrank in size and weight to the point where it could hang under
the cow, held up only by the sucking force of the milker nipples on the cow's udder. The milk
is pulled up into the milk-return pipe by the vacuum system, and then flows by gravity to the
milk house vacuum-breaker that puts the milk in the storage tank. The pipeline system greatly
reduced the physical labor of milking since the farmer no longer needed to carry around huge
heavy buckets of milk from each cow. The pipeline allowed barn length to keep increasing
and expanding.
MILKING PARLOURS
Innovation in milking focused on mechanizing the milking parlor to maximize throughput of
cows per operator which streamlined the milking process to permit cows to be milked as if on
an assembly line, and to reduce physical stresses on the farmer by putting the cows on a
platform slightly above the person milking the cows to eliminate having to constantly bend
over. Many older and smaller farms still have tie-stall or stanchion barns, but worldwide a
majority of commercial farms have parlors.
The milking parlor allowed a concentration of money into a small area, so that more technical
monitoring and measuring equipment could be devoted to each milking station in the parlor.
Rather than simply milking into a common pipeline for example, the parlor can be equipped
with fixed measurement systems that monitor milk volume and record milking statistics for
each animal.

HISTORY OF MILK PRESERVATION METHODS

Keeping milk cool helps preserve it.

The naturally cold underground water would be

continuously pumped into a tub or other containers of milk set in the tub to cool after
milking. This method of milk cooling was extremely popular before the arrival of
electricity and refrigeration .
When refrigeration first arrived (the 19th century), the equipment was fairly small and did not
have the ability to rapidly cool the large volume of milk that was entering the storage tank in

10

a short period of time. This problem was resolved through the development of the ice bank.
This is a double-walled tank design where water and cooling coils fill the space underneath
and around the milk tank above.
All day long, the small compressor and cooling system slowly draws heat out of the water,
while a second pump continuously circulates the water around the coils. Ice eventually builds
up around the coils, until it reaches a thickness of about three inches surrounding each pipe,
and the cooling system shuts off. When the milking operation starts only the milk agitator and
the water circulation pump blowing water across the ice and the steel walls of the tank are
needed to rapidly reduce the incoming milk to a temperature below 40 degrees. But because
the ice is not permitted to build up until it touches the milk storage tank, the milk does not get
cold enough to also freeze.
This cooling method worked well for smaller dairies up to about 40 cows, but for large
numbers of animals a better system was needed to rapidly cool the incoming warm milk. This
is usually done using a device known as a plate chiller, which is a heat exchanger. Alternating
stainless steel plates cause the milk to flow in a thin sheet across the plates, while cold water
is circulated in a thin sheet on the other side of the plates.
Flattening out the milk flow permits quick. Even cooling for all the milk, compared to a
round tube where the center core does not cool as rapidly as the walls. The plate chiller has
high cooling demands, and for many farms this involves a step back into the past, back to the
days of windmills and milk-can cooling, except now a large volume of naturally cold
underground water is continuously streamed through the plate chiller to quickly bring the
milk down to the temperature of the underground water at about 50 F (10 C). The water is
usually not just dumped back into the ground again, but reused for washing and other
purposes.
But the milk still is not as cold as it needs to be, so the milk storage tank is still used to do
further cooling, to bring the milk down to 40 degrees. But with the development of highpower 3-phase electrical service, ice-bank chillers are typically no longer used. Instead the
milk storage tank is a direct-cooling system with cooling coils embedded in the walls of the
tank that quickly pull the heat out and dump it across a large array of possibly several

11

different high-horsepower compressors and condensing units. Once the milk has achieved
40 F (4 C) after milking is finished, only one or two cooling units need to run occasionally
to maintain the correct temperature.
DAIRY INDUSTRY IN INDIA
The dairy industry is emerging as a sunrise industry. India is one of the worlds largest and
fast growing markets. For milk and milk products due to increase in income among the 450
million strong middle classes.
India has become the second largest milk producer in the world, next only to the U.S .India is
on the verge of being the worlds number one milk producer with nearly 80 is on the verge of
being the worlds number one milk producer with nearly 85 million metric tones of milk per
annual. it is estimated that our dairy business is to be around Rs.90,000/-crores and it
contributes approximately 9.05 percent of the total GDP
Dairy industry profile:
a) Population:

150 million

(100million dairy farmers).

b) Milk production:

82.3 million tones

c) Average annual growth:

7.0% rate (till 2008)

d) Per capita milk availability: 310g/day or 78 kg /year

In spite of rapid strides made in increasing the milk production .the per capita availability
would be very low at 220 Gms per day. To meet the demand for the growing population there
is great need to increase the milk production in India than the projected growth rate of
5percentage per year.
DAIRY DEVELOPED IN ANDHRA PRADESH:
The dairy industry is to be developed in Andhra Pradesh, as there was 16.74 lakhs of milk
animals in our state, and it expected to produce 41lakhs liters of milk per day. Even through
our country has 25% of the total world population .this is due to low of our yield of our milk

12

animals now. The per capita milk consumption of ever India is 118Gms per day and it is
estimated that the milk consumption would be 64.40 million tons in 2007-2008.
The state of AP was constituted in November 1956 till then .it was a part of madras state. The
first attempt towards organized dairy development was started by initiating pilot milk supply
scheme at Hyderabad in 1960 as a prelude for establishment or integrated milk projects with
assistance of UNICEF.UNICEF denoted for dairy development worth one corridor setting
up of the central dairy. these dairies along with a few chilling centers were established in
1967.at the same time intensive cattle development block are organized which provided the
inputs needs; for increasing the milk production .these dairies and inputs were managed by
the concerned department Of the state government during 1974 AP dairy development
corporation (APDDC) was setup commercialized dairy development the state and to ensure
proper utilized of resource the government of AP now developed industry in the state as
ANAND PATTERN by involving the milk producer in organizing the production,
procurement processing and marketing.
ACHIEVEMENT:
Today 6 lakh farmers are supply milk through 8,017 dairy collection centers.
Covering about 12541villages 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 2007-2008. AP has
made rapid strides in the past 3 decades and has emerged as a major milk state. Dairying cooperative has become an instrument for change and growth in villages.

QUALITY CONTROL:
Quality aspect of milk has not received much attention due to the general shortage of
milk .the quality of milk they supply is far from what is required or not according to the
control manager .The planned dairying therefore should he provided.
Milk is the only single food item that fairly represents the complete human diet. It
has proteins and micro ingredient in India is identified with rural farmer as an essential

13

subsidiary to agriculture. The govt. started a dairy at Visakhapatnam, under the intensive milk
supply scheme in 1970-71 with a handling capacity of 6000 litters. now the present capacity
1.5 lack litter per day. With a view to utilized the resources from national co-operative
development council for the large scale dairy to meet the growing need Visakhapatnam city
besides the small marginal farmers and milk producers co-operative was registered covering
the district of Visakhapatnam and Srikakulam govt. arrange finance to this union from NLDC
to establish the Visakha dairy with an initial handling capacity of 1.50 lakes liters expandable
to 1 lakh liters its expansion to 1.50 lakhs liters was completed by 1990.it has a polythene
sachet packing system for milk. The total investment on Visakha dairy was about RS 3 crores
MILK IN VARIOUS PARTS OF INDIA
RAJASTHAN DAIRY TURNOVER UP:
The Rajasthan Co-operative Dairy Federation Limited (RCDFL) has recorded a turnover
of Rs.159 crores during 1996-97, a 49% increase over previous fiscal Rs.109 crores.
Profitability too increased. Nine unions posted cash profit, size of that earned a net profit for
1996-97 where as in 1993-94 only four unions earned cash profit with a single union
producing a net profit.

MILK TESTING CAMPAIGN IN JAIPUR:

Consumers of loose milk in Jaipur are cheated to tune of Rs.26 crores every year by way of
adulteration of water in the milk.
Milk testing campaign popularly known as Doodh ka Doodh pani ka pani was organized
from 15th June, 1996 to 30th June 1996 covering prime localities of Jaipur city.
GOA TO PROMOTE DAIRY INDUSTRY
Goa Government is now focusing its efforts on the promoting dairy farming in the state. A
subsidy of 25% up to Rs.25 lakh on the investment is provided, giving this sector the status of
industry. Enhanced production will reduce Goas dependence on imports of milk from

14

neighboring states. Over 45000 liters milk comes into the state daily from dairies in the other
states as local unions produce barely 50000 liters of milk per day.
INTERNATIONAL SCENARIO OF DAIRY INDUSTRY
LIQUID MILK MARKET
Average 14 billion of milk was produced every year in UK, 73 million tons in USA and
Indias production is around 75 million tons. Half of the total production of milk is used for
manufacturing other products. In UK the liquid milk sales has seen a decline since the
previous 10 years.
Since 1980 more than 90% of milk was purchased from the milkman. By 1980 this
declined to 89%, in 1985 to 81.9%, in 1990 to 68.3% and by 1995 delivery accounted for
44.5% of all milk purchased. Sales in supermarkets and small shops increased in relation to
the decline in doorstep share.
CONTAINERS:
36% of all the house hold milk sold in England, Scotland and Wales is sold in glass
bottles, with plastic containers claming 50% of the market and cartons the remaining 14%.
Virtually all milk sold in glass bottles is sold in doorstep delivery while disposable packaging
accounts for almost all shop sales. Major types of milk available internationally are

S.no Type of milk

Energy value (calories)

Fat content (%)

Whole milk

487

6.0

Toned milk

387

3.0

Low fat milk

270

1.0

Skimmed milk

194

0.1

Homogenized milk

All fat is spread evenly

15

INDIAN SCENARIO OF DAIRY INDUSTRY

The main stay in Indian farmers has been agriculture and allied occupations, farm
animals especially cattle have been an integral part of rural India for thousands of years.
During the year 1920 military farms were established to supply adequate raw milk to the
stations. These were walls maintained and improved.
In 1946 the first farmers integrated dairy co-operative was established in kaira district as
Anand which later came to be known as Amul. Amul and Greater milk scheme set together
a faster pace of dairy developed with emphasis on developed techniques of processing and
marketing under Indian conditions.

INSTITUTIONAL SUPPORT TO CO-OPERATIVE DAIRYING:

Indian Dairy Corporation:
The Indian dairy corporation (IDC) was set up under companies act on 13th February
1970. It is a Government of India undertaking. The immediate need to setup IDC was to
handle the popularly known operation flood.
India has emerged as the worlds top dairy nation with milk production crossing 75
million tons in 1997-98. It is placed second in the milk production when compared to the
USA. The Indian dairy industry production is estimated to have risen from a low of 20
million tons to 75 million tons
Though our country has 25% of the total world agriculture animals, yet the production
of milk is only 6.5% of the world programme. India is the second largest populated country
and the consumption of milk is also high. In order to meet the requirements of the people the
operation flood programmed was developed.

16

In every 5 year plan emphasis is even given to agriculture also which includes
farming, dairying etc. In India the state in which the production milk is high in Gujarat. It is
estimated that the per capita consumption of every Indian is 118 grams but the minimum
requirement for good health is 210 grams per day. It is also estimated that the consumption
would be 64.40 million tons in this year. Therefore, it is necessary to develop dairy farming
in India.

CHAPTER-3

17

COMPANY PROFILE OF VISAKHA DAIRY

BACKGROUND
Vijaya Visakha Milk Producers Company Limited., [Visakha dairy], Visakhapatnam in
Andhra Pradesh, is having their procurement operations in Costal Andhra districts, Viz.,
Srikakulam, Vizianagaram, Visakhapatnam & in East Godavari and Sales operations across
India.
The dairy was started in the year 1973 with handling capacity of 10000 liters per day in
Visakhapatnam under cooperative act with milk procurement operations in 50 villages. Now
the Dairy is procuring the milk from 2744 villages in Costal Andhra areas by serving 2,
07,925 milk producers.
The Dairy was converted to mutually Aided Cooperative Act-1995 I the year 1999 as
'Srivijayavisakha District Milk producers Mutually Aided Cooperative Union' and the Dairy
was converted to Company Act-1956 with effect from 06-01-2006 as 'Sri Vijaya Visakha
Milk Producers Company Limited'. The Procurement and Production graph growth is
increasing year after year with more participation of the rural farmers. Now the Visakha
Dairy is one of the fastest growing Milk & Milk Products Manufacturing organizations.
At present we have total no. of 150 Milk Booths, out of which 410 outlets are selling milk
and milk products round the clock. We are supplying milk and milk products in the three
districts of North Coastal Andhra viz., Srikakulam, Vizianagaram, Visakhapatnam, Kakinada

18

and Tuni also in East Godavari District. We are distributing milk through 31 routes for a
wider coverage and accessibility of the public. We have been doing all sorts of sales
promotion activities with innovative ideas for development of milk Last Ten Years Statistical
Information of Procurement and Liquid Milk Sales.

Financial Year

Procurement (Lts in Lakhs)

Milk Sales (Lts in Lakhs)

1995-96

472-78

439.78

1996-97

536-52

459.47

1997-98

689.52

508.56

1998-99

715.40

506.34

1999-00

708.32

558.17

2000-01

769.71

579.87

2001-02

995.71

611.63

2002-03

1112.29

739.17

2003-04

1165-.54

851.99

2004-05

1231.50

1025.33

2005-06

1440.59

1168.20

2006-07

1401.76

1376.70

2007-08

1407.71

1426.84

2008-09

1411.81

1450.20

Dairy Information
No. of Milk Chilling Centers

No. of Bulk Cooling Centers

84

No. of Feed Mixing Plants

Union Training Centers

No. of Societies

1545

19

No. ofMPACs

2145

No. of Women Societies

67

No. of Producers in Societies

179146

No. of Women Members

33245

No. of Veterinary First Aid Centers

661

No. of Emergency veterinary Routes

19

MISSION : Visakha Dairy is not only concentrating on the farmer's cattle welfare but more
equally giving priority for the welfare of farmer families in different dynamics like....

HEALTH

EDUCATION
SOCIO-ECONOMIC MEASURE
In this process Visakha Dairy Chairman established Welfare Trust in 1989 name as Milk
Producers and Employee's Education Health and Medical Welfare Trust (MP & EEH & MW
Trust).
The main aim of the Trust is to extend Medical Health and Educational facilities particularly
to farmers and their families. In this direction the trust has established a modern hospital fully
equipped with the latest technology and employed specialist and super specialists. Further, it
has established schools and colleges for rural poor and farmer's children.
The Trust's activities are being carried out in 8.25 acres of land in the vicinity of city of
Visakhapatnam. Various social welfare activities have been undertaken since its
establishment. These activities have been applauded by various Government officials, Chief
Ministers, Parliamentarians, Ministers and other Public Figures.
HEALTH:
Krishi Trust Hospital is one of the most well equipped and best Medical Trust Hospitals in
the Green City of Visakhapatnam. The Hospital is a 100 bedded modern multi - specialty
cum critical care referral hospital. To give the patient best care round the clock, the hospital is

20

fully infrastructure with Hi-Tech equipment of world class quality to provide best medical
care. Krishi Trust Hospital is situated in a quiet and serene place in Sheelanagar away from
the noise and pollution of the city.
EDUCATION :
Trust provides the residential educational facility with subsidized rates for Visakha dairy milk
producers and employees childrens & general public also. It provides free education to
orphans recommended by the local village heads as well as to children who are below
poverty level.
Providing Education from Primary Level to Junior College & Nursing Collage. Computer
education is provided from 3rd class onwards. We have Residential facility for 300 Students.
We believe in value based education, our teacher student ratio is 1:25 in true spirit. Our
students are disciplined and hard working, so every year the school gets good results in the
general public exams. Our aim is to impart qualitative education.
There is a well equipped Laboratory, Library, and Multi Media Computer Lab. We have a
playground with sports facilities. Our Students are selected for national sports, and sports
academy in Andhra Pradesh
SOCIO-ECONOMIC MEASURES:
Various social welfare activities have been taken up by the Trust. Among the other activities,
the Trust has provided drinking water to rural poor by digging Bore Wells in villages and
arranging water channels for farmers by digging old and new reservoirs, and also constructed
bridges on rivers, where crossing rivers were impossible for rural people in rainy season.

Major task of the Trust is identifying, training, providing employment to weaker sections that
are not having any support from the society. Hither the Trust has provided employment
directly and indirectly to 300 people.

21

Providing Employment to Physically Handicapped, every Year by conducting interviews

with cooperation of Visakha dairy. Providing employment to women, who are physically
abused by their family and who have no other source of living.

ORGANIZATIONAL STRUCTURE:
Organizational structure mainly refers to the relationship among the various Positions that
must work together to fulfill certain routes.
The Visakha Dairy has a centralized organization structure with a good communication
system .There is immediate feedback at every stage. Chairman, Board of Directors, general
Manager, Sr.Manager, Manager, Jr.Manager and Supervisory staff, leads organizational setup
in Vishaka Dairy.

22

ORGANISATION CHART OF VISAKHA DAIRY

Board of Management

Field
operation

Plants
project

Marketing

Finance
accounting

23

Personal

Mis

Civil
project

Production

Engineering &
maintenance

Aps

Quality
control

Dispatch

FUNCTIONAL DEAPARTMENTS OF DAIRY

MARKETING DEPARTMENT
Marketing department in any organization plays a vital role Vishaka Diary is having
efficient Marketing department as

The first and foremost job of the Marketing personnel is

Identification of consumers, of their products .This can be done through Market surveys.

Along with identification of the customers, the Marketing

Personnel has to identify the needs of the customers i.e. what are the features, quality and
sizes, price are expected from the product.

Next important function is the generation of the Business .This

function can be done by educating the buyers about various features and advantages of the
Dairy products as compared to completion products and explain the cost benefits and

24

qualities at the product .This can be done through using various sales promotion tools such as
discount coupons, promotional letters and advertising through various media and through
direct Marketing.

The next task of the Marketing Dept is to supply the product accurately at right time.

Size of the market:

The size of the Milk Market is very wide. Presently the Milk is available in various brands in
the market. The Dairy's Milk is having a market share of 75% by maintaining good quality
and cost when compared to other competitor's products
Market Segmentation:
People living in the different places may vary in their buying nature of the same product. The
dairy segmenting the Milk Market by selling mixed Milk* only in Srikakulam and toned
whole milk in all of its market.
Marketing Information
Vishaka Dairy has appointed efficient marketing personnel for collecting all the marketing of
its products and its competitor's Products.
Product development:
Product development is the important task of dairy .The Dairy will watch the day by day
development in Milk market and make necessary change in its product mix to meet the
requirement of the buyers. The development may be related to the quality, size .Features
packing of existing products (or) the development of new product .In this process, Vishaka
Dairy recently developed skimmed Milk powder, which was introduced in the market with
Visakha Dairy Brand name.

25

Category of Products:
Vishaka

Dairy

products

were

categorized

into

two

types

i) Milk ii) Milk Products.

Government policies and Legislation's:
The government has been supporting the Vishaka Dairy through many ways. The
Government did not levy any taxes on the Milk sales. But other products were levied taxes as
per Government norms and legislation.

Distribution Policies:
Vishaka Dairy adopted various distribution policies in order to increase the availability of
Milk to the consumers. Through wide distribution network, the Dairy is experiencing a great
response in its sales than its Competitors. The major distribution channels that the firm has
taken up are:
Sales through parlours and Milk sales pointer
Direct Sales to Buyers who are buying the Milk in large quantities such as hostels, large
hotels etc.
Direct supply to other states such as Orissa and West Bengal by engaging the private and
company tankers through both Rail and Road transportation.
The dairy is using private vehicles for supplying its products to Milk sales points and
parlours, which are in three districts Visakhapatnam, Vizianagaram, Srikakulam.Visakha

26

Dairy giving incentives / commission to the parlours & agents as 3.1% on the M.R.P. per the
below products, etc.

FINANCE DEPARTMENT
The financial decisions play a vital role in any firm, so that it is essential to set up an efficient
and effective organization for maintaining finance functions. Visakha co-operative Dairy has
a finance department, which is directly under the top management .The finance department
works under the Manager Finance.
Market share:
At present Visakha dairy is having a market share of about 75%.
PRODUCTION PLANNING:
Production planning is one of the main functions of the production department. It can be done
under the production manager. The function of production planning involves the decision of
when, what, how and how much to produce goods.
Production Control:
Once the plans for production are prepared, the next task is to control the production. This is
essential in order to meet the demand for the product. Moreover the production department
maintains the quality of the products through following quality control by taking the steps to
minimize the effective work along the above functions. The production department also
controls the inventory and measure the amount of work done. The production department of
Visakha dairy following all the above production functions such as maintaining good quality
through quality control size of production, which is sufficient for demand with demand
production control and handling the materials in an efficient way, which in turn reduces the
production cost

27

Production process:
In Visakha dairy, the process of production starts with receiving of milk from various
societies. After receiving the milk, weight of milk (cow's as well as buffalo's milk) will be
measured along with its fat. Then the milk is to pasteurized i.e. cooling and heating.
The milk is cooled in chiller at a temperature between 6C to 10C. After chilling the milk
will be stored in three storage tanks of capacities of 15000 Ltrs, 30,000 Ltrs & 33,000 liters.
This milk is then passed to balance tanks. Then the milk is passed to Pasteurizer machine. In
pasteurizer, the milk will be heated first at 75 0C then at 450C and finally at a temperature
below 500 through three pasteurizers of capacity 7,000 liters per hour, 9,000 lph to 15,000
lph.
Pasteurized milk will be stored in six storage tanks of different storage capacities like 15,000
Ltrs, 30,000 Ltrs, 33,000 Ltrs, and 60,000 Ltrs. Finally the package section. The extra fat will
be removed from the milk before passing to the package section. This fat separation can be
done with fat separator. With this the cream will beeparated and passed to another balanced
tank and there it is pasteurized at temperature between 5C to 7C (cooling) and will be
heated between the temperatures of 82C and 85C. Then the cream will be stored at cream
storage tanks of capacity 5,000 liters of two tanks and another two tanks of capacity 3,000
liters. With this step the production process will be complete. Along with this production
process, the production department will supply the milk of required fat to various sections,
which are meant for making Doodh peda, Paneer, Butter Milk, sterilized flavored milk, skim
milk powder, Lassie UHT milk (Good milk), plain cova, milk cake, mysore pak, kalakand,
badam barfi, misti doi, and cream will be sent to Ghee manufacturing section.
Production capacity:
The present production capacity of the plant is 2, 00,000 liters per day
Technology
Visaka dairy is using foreign technology in milk and other milk products production such as
using pasteurizers bulk coolers etc.

28

Research & Development:

Visakha dairy is always striving for new product development and also tries to develop
existing products
GROWTH OF PRODUCTION AND PROCUREMENT OF MILK:
The production and procurement started increasing year byyear with more participation
of the rural farmers. The handing capacity of visakha dairy has been enhanced from time as
stated below.
- 50,000 to 1, 00,000 liters per day.
- 1, 00,000 to 1, 50,000 liters per day.
1991-92

-1, 50,000 to 2, 00,000 liters per day.

Milk procurement

This union is procuring milk through a network of 886 primary milk producers cooperative
and 1791 un- registered centers. The average daily procurement of the union during 2005-06
is 3, 94,681liters per day and present procurement is 4, 27,907 liters per day. The peak
quantity touched during the year 2005-2006 is 4, 46,907 liters. This is another vital technical
input activity implemented with long vision to improve the milk procurement apart from
procuring the day-to-day available surplus.

Milk chilling centers:

S. No

Name of the center

District

29

Capacity

MCC arsipatnam

Visakhapatnam

5000

MCC Vizianagaram

Vizianagaram

3000

MCC Rambadrapuram

Srikakulam

5000

MCC Srikakulam

Srikakulam

5000

MCC Tuni (lease)

East godavari

3000

MCC Kakinada (lease)

East godavari

50000

Bulk cooling centers:

With a view to stand stiff in global competition, visakha union on the quality front
installed 74 bulk-cooling centers. Extension services are provided to educate and help the
milk producers in clean milk production, animal health and productivity.

S.no

District

Capacity

Visakhapatnam

37

Vizianagaram

Srikakulam

East godavari

24

30

LAST TEN YEARS SALES OF MILK &MILK PRODUCTS IN VCD

31

Particular

1999-00

Milk sales in 138733

152450

2000-

2001-

2002-

2003-

01

02

03

04

05

06

07

08

158000

17000

202600

23503

28096

320263

37717

395174

48085

54259

41380

56135

liters(day

2004-

2005-

2006- 2007-

average)
Products
Ghee (in kgs) 705536

1150155

542350

72356

429000

9
Smp (in kgs)

81619

1201534

20360

11409

75000

85
Doodipada

25973

Sfm (200ml 277823

1736378

Curd (in kgs)

Pannier

5695

in 179

70302

803030

04

194363

15742

16450

27003

30801

46103

56000

70167

81711

82501

93282

93528

291502

576586

71607

101500

13870

22723

339120

40571

406810

27

08

280955

44004

560000

59358

68207

198760

26333

290450

50

70

08

9238

39436

56000

12973

15596

209763

34048

450588

81

09

71

30867

62632

107082

13645

150470

bot)
Butter milk

421839

2502077

11623

2699

4649

10696

15600

kgs

Rose milk

250

2848

3205

3500

3552

3524

3377

15823

41865

579954

53

75219

36988

63400

20997

27738

315106

70

60

3294

105 45

Milk cake

33641

412 27

Badam burfi

10508

106 58

Uht milk

Tp

flavored

milk
White butter

70000

Mostidhohi

15000

(in kgs)

(in kgs)
Mysorpak (in

247 9.5

kgs)
32

Curd bulk: 10kg, 20kg, 30kg, and 40kg

MAJOR PROJECTS:
Powder plant:
As the recipients of milk exceeded the 2,00,000 liter per day capacity and the peak
procurement was reached to the level of 2,14,000 liter during the 1992,whereas the local
liquid milk sales in about sales in about 1,00,000 liter per day and in order to convert the
surplus milk into milk power, a milk power factory with a capacity of 13 MT per day with a
capacity outlay of Rs. 7.00 crores was constructed and started commissioning from may,
1998.

Uht plant/aseptic packing station:

With a view to diversity the product range for capturing the new market, the value added
premium, product of aseptic milk/flavored milk fruit juice packing, an aseptic packaging
station (UHT plant) was established.
Milk porch filling unit-II
As a present 2.00 lack liter of milk is being packed in pouches to meet the local sales
demand with considerable constrains. The existing milk cold storage capacity is limited to the
minimum capacity of 70000-lt.only .it is also required renovation. Keeping in view of the
future of the demand, it was proposed to strengthen the pouch filling facilities to pack up to

33

2.50 lakh liters of milk per daywith sufficient milk cold store and required refrigeration plant
with an out lay of Rs.256 lakes
Procurement:
This union is procuring milk though a network of 800 primary milk producers co-operative
and 766 unregistered centers across three districts. The average dairy procurement of this
union during 2007-2008 is 5 lakhs .this is another vital activity implement with long vision to
improve the milk procurement a part from procuring the day available surplus.
STRENGTHS:
Vcd motives 70 year of the consumer of Visakhapatnam la consumer visakha milk.
Efficient procurement and physical distribution systems.Regular prompt and timely supply of
milk and milk products at its own parlour and retail outlets.

WEAKNESS:
1. Vcd is not able to meet the demand of the milk products due to less allowance of milk to
process the milk products.
2. in effective promotional activities arc less effect
PRODUCT DEVELOPMENT:
Product development is due of the important task of the dairy will watch the day-by-day
development in milk market necessary changes in its product mix to meet the requirement of
the buyers. The development may be relating to the quality,size, features, packing, or exiting
products the development of new product. In this process, visakha dairy recently developed
good milk which was introduced in the market with vijaya brand name.

Product

Qty

M.R.P.

34

Toned Milk

0.5 Ltrs

Rs. 11-00

Homosinised milk

0.5 Ltrs

Rs. 14-00

Full Cream Milk

0.5 Ltrs

Rs. 15-00

Double Toned milk

0.5 Ltrs

Rs. 13-00

Range of milk &milk products:

MILK

W.M- T.M, HTM-DTM (200ml, 500ml, 1000ml)

UHT MILK

1Lts, 500ml.&200ml (DTM, TM, STM)

GHEE

15kg.tins, 200ml,500ml & 1LT

Tetra S.F.M

Chocolate, badam,pine apple .

BUTTER MILK

LASI

CURD
MISHTI DOI

200ml

:
:

200ml

100grms, 200grms, 500gr;

100grms;

PANEER

200gr, 500gr, 1kg;

DOODH PEDA

25gr, 250gr;

BURFI
MILK CAKE
MYSOREPAK

:
:

250gr.500gr:
250gr, 500gr;
:

250gr, 500 gms

35

CHAPTER -4
THEORETICAL CONCEPTS

36

INTRODUCTION

Channel of distribution is the most powerful element among marketing mix elements.
The main function of this element is to find out appropriate ways through which goods are
made available to the markets. It is a managerial function and hence proper decisions are to
be taken in this matter before commercial production begins.

This is so because the

efficiency of its channel of distribution is often what separates a successful firm from an
unsuccessful firm.
THEORETICAL CONCEPTS
Marketing channels are the most complicated phenomena encountered in the study
of marketing. They encompass elaborate behavioral systems that usually involve many
decision makers and often extend over a wide geographical area. One aspect of these systems
is their constants interaction they lead, there follow, they control, they conflict, they cooperate.
This might be the reason why Peter Ducker qualified this function of marketing as a
Dark Continent. IN the past, this aspect had not received its due attention and recognition
in marketing planning since the distribution was not usually under taken by the producers.
Later on, the producers were facing certain gaps in their distribution process resulting in an
imbalance between production and sales. They also understood that many a product, which
was intrinsically food, had dies in infancy because it literally never found the right road to the
market. The gap was found out to be as follows.
1. Customers are usually scattered, where as production is concentrated in a few centers.
This may be treated as spatial gap. Transportation is used to cover up this gap and includes

37

all activities directly concerned with moving goods form the place of production to the place
consumption.
2. Customers make their purchases at regular intervals, where as production has to be
organized on continues process. This is a temporal gap. Inventory deals with these gaps.
This includes activities concerned with holding goods between the time of production and the
time of sale.
3. Manufacturers organize large-scale production to reap benefits of economies whereas
customers prefer to by only in small quantities. This would naturally create a gap to be called
perceptional gap. This gap is covered by promotional activities. They include giving of
percussive information and buyers re prompted at make quick repeal purchases.
4. Basically customers cannot have full information of producers and products available and
naturally this prevents free exchanges. This may be designated as transactional gap. This is
the most difficult gap to be filled up. This gap could be effectively covered only by proper
distribution arrangements.
The concept of distribution as agaps only theoretical value. This approach fails to explain
planning and control aspects needed in channel management. For example, for one type of
product a particular channel would be ideal, but for another type an alternative channel may
be more suitable. In both cases gap is the same but different approaches are necessary.
Again the channel selection end control might vary depending upon the nature of business.
Moreover, external environments condition distribution activities as the market is outside the
business. Above all, it should be noted that channels chooses for the companys.
Products intimately affect every other marketing decision and they involve the firm in
relatively long-term commitments to other firms.

For a consumer-oriented firm every

channel represents as customers and his needs and desires must be catered in full. The gap
approach therefore, would be of no value if the above factories were considered.

DEFINITION:

38

Every producer seeks to link together a set of marketing intermediaries that fulfill
the firms objective. This set of marketing intermediaries is called the marketing channel.
The American marketing association defined the term as the structure of introduced
company organization units and extra company agents and dealers. Whole wholesalers and
retailer through which a product or service is marketed.
The definition includes two aspects:
1. The firms internal marketing organization units and the outside business units, which a
firm uses in its marketing work.
2. The channel structure of the individual firm and the firm entire channel complex available
to all firms.
The channel is also described as a grouping of intermediaries from first owner to the
last owner, who take title to a product during the marketing processes.
The wordchannelhas its origin in the French word used for channel. Thus a
channel is a medium through which goods are make to moves as smoothly as possibly to the
desired places. In other words, the route through which goods move from the place of
production to the place of consumption is termed as channel of distribution.
A.W.Shaw defined distribution as as the application of motion to materials as they
move from the times, places, forms and conditions where they have value. The channel is
therefore the vehicle for viewing marketing organization in its external aspects and for
bridging the physical and non-physical gaps, which exists in moving goods from producers to
consumers through the exchange process, including the determination of price.
The process of distribution encompasses the movement of goods from the point of
production, or from storage locations, along the channel of distribution. The marketing
function includes three elements.
1. The transportation of goods physical movement of goods or traffic management.
2. The location of goods storage.

39

3. The institutions facilitating the easy movement of goods.

The first two elements are discussed in detail in a previous chapter. The present chapter deals
with the third elements.
CHANNEL OBJECTIVES
There is, however, a misconception that channels are permanent features of a
companys marketing activity. But this does not seem to be correct. Along with the shifts in
overall strategy of firm corresponding changes in channels system may be necessary. In
other words, existing trade channels are not a constraint in the design of marketing strategy;,
for this reason, channel decisions are included as a part of strategy rather than as part of the;
marketing organization.
The channel objectives may be numerous depending upon the marketing and
corporate objectives. A few examples are mentioned below:
1. Growth in sales by establishing distribution in new markets.
2. Improvements/maintenance of market share.
3. Creation of an efficient channel system.
CHANNEL FUNCTION:
In any developing economy there is an increasing emphasis on specialization and the
division of labor. As a result of this a gap gets developed between producers and users.
The primary purpose of a distributive channel is to bridge this gap by; resolving spatial and
temporal discrepancies is supply and demand. For this irrespective of the extent of these
discrepancies, certain essential functions need to be performed. These are:
1. Transfer of title to the goods involved.
2. Physical movements from; the point of production to the point of consumption.
3. Storage function.

40

4. Communications of information concerning the availability, characteristics and price of the

goods in transit, inventory and on purchase.
5. Marketing creates various utilize4 to the products. Most of utmost these utilities are, in
fact, created by performing the functions of physical distribution promptly and efficiently.
Channels of distribution help to move goo9ds from one place to another hence, they add
place utility; they bring goods to the consumer when the consumer in a convenient shape,
unit, size, style and package, Hence they add convenience value. They make it poss9hbel for
the consumer to obt6qin goods at a price he is willing to pay, and under a conditions bring
him satisfaction and pride of ownership hence, they add possession value.
The important of this function varies depending upon the nature of the goods
themselves. For example transportation and storage tend to predominate in the case of bulky
raw materials such as coal, petroleum products and iron ore,
Where price and specifications are standardized and the market comprises a limited number
of buyers and sellers.

As the complexity of the product increase3s, the prohibition of

information and product service becomes predominant, for example computers, automobiles
etc.min the case4 of consumer goods, advertising and sales promotion constitute the ;major
communication channel. Contrary to this, industrial goods depend more on personal selling,
owing to the more heterogeneous nature of the goods involved. Therefore, it is necessary to
consider the precise nature of the product and the seller-buyer relationship to determine their
relative importance.
PHYSICAL DISTRIBUTION AND CHANNELS OF DISTRIBUTION
If distribution could be treated ax whole function of marketing, then it could be split
into two components. Physical distribution and channels of distribution. It is found that
these two streams are used, sometimes interchangeably.
CHANNEL OF DISTRIBUTION

41

Channel of distribution refers, primarily, to the middle or intermediary marketing

institutions, which performs certain marketing function. More than performing the functions
these institutions try to gain access to the target market.
PHYSICAL DISTRIBUTION
Physical distribution on the oh6er hand, concerns with material aspects of the flow
of goods to the consumers. It includes transportation, storage, warehousing, packing etc. it is
a technical function in the sense that it ensures availability of product at the right time , at the
right palace and in the right ;form. The term is used often in a broad sense to include
channels of distribution also
KINDS OF CHANNEL MEMBERS
The channel of distribution includes the original producer; the final buyer and any
middlemen wither wholesaler or retailer. The term middlemen refer to those institutions or
individual s in the channel, which either take to the goods or negotiate or sell in the capacity
of an agent or taken broker. Thus from the marketing point of view the middlemen and
intermediaries are the same. ON the same basis of taking title to goods these middlemen are
decided into merchant middlemen and agent middlemen, merchant middlemen, obviously
take a title and later affect sales on their own accord. Agent middlemen, on the contrary do
not take title to goods,.

They simply get an order from the buyer and pass it on to the

producer and seller they are also known as functional middlemen. ON the basis of the
position of the middlemen in the chnbne4l of distribution, they are also classified into
wholelsalee5rs and retailers. Wholesalers are closer to the manufacturers while retailers have
a close touch with customers. The various kinds of middlemen are:
AGENTS:
The middlemen who do not take any title to goods. They take active part in
the marketing mechanism rendering all services required. They do not usually repr4esent
both the buyers and the seller in the same transaction.
manufacturers agents, selling agents etc.

42

Ex: - Commission agents,

2.

BROKERS:
Agents who do not have direct physical control of the goods in which they

deal. They represent either the buyer or the seller in negotiation purchases or sales for their
principal. The brokers powers as to prices and terms of sale are usually by limited their
principals.
3. DEALERS:
Firms that buy or resell products t either retail or wholesale basis
4. DISTRIBUTORS:
It is a general term used to mean wholesalers.
5. JOBBERS:
This term is widely used as a synonym of wholesalers or distributors. The term
is also used in certain traders and localities to designate special types of wholesalers. They
are usually found in stock markets
6. RACK JOBBERS:
A Wholesaling business unit that markets specialized lines of merchandise to
certain types of retail stores and provides special services such as arrangement, maintenance
and stocking of products in display racks. The rack jobber, usually, but not always, put his
merchandise in the store of the retailer on consignment. Rack jobbers are more common in
the food business..
7. RESIDENT BUYER:
An agent or a person who specializes in buying on a fee or commission basis,
chiefly for retailers.
8. RETAILER:

43

A merchant, or occasionally an agent, whose business is selling directly to the

ultimate consumer.
9. WHOLESALER:
A business unit, which buys and resells merchandise to retailers and other
merchants and to industrial institution and commercial users but which does not sell in
significant amounts to ultimate consumers. Generally these merchants render a wide variety
of services to their customers. There are various kinds of wholesalers, such a distributors,
services wholesalers etc
10. COMMISSION HOUSES:
There are also referred to as commission merchants. These agents usually exercise
physical control over and negotiate the sale of the goods they handle. The commission
houses usually enjoy broader powers over the prices, methods and items of sales than the
brokers but they are also bound to obey instructions issues by the principal. They generally
arrange delivery extend necessary credit, collects, deduct their fees and remit the balance to
the principal.
11. DISCOUNT HOUSES:
Discount houses is a retailing business units featuring durable consumer items,
competing on the basis of price appeal and operating on a relatively low mark-up and with a
minimum m of customer service.
12. BRANCH HOUSE:
It is an establishment maintained by a manufacturer detached from the head office
and used for the purposes of stocking, selling delivering and ser5vicing his product a branch
office is also similar to a branch house.

44

13. FACILITATING AGENCIES:

These agencies perform or assist in the per5formance of one or a number of
marketing function, but they neither take title to goods not negotiate purchase or sale.
Common types are banks, railways, warehouses, commodity exchanges, assurance etc.,
14. CONSUMER CO-OPERATIVE:
Tribute gods and services primarily to the member. Such societies are sometimes
referred to as purchase co/operative also.
15. INDUSTRIAL STORE:
A retail store owned and operated by a company to sell primarily to its
employees. Non/governmental establishment are often referred to as company stores
FUNCTIONS OF MIDDLEMEN
Nothing prevents a producer form meeting hi customers directly and effecting
sales. If a seller does not use this privilege then there must be certain unchallengeable
advantages. The advantages could be stated thus:
1. Many products do not have the resources to engage themselves in direct marketing.
2. Middlemen reduce transaction to an optimum number.
3. Middlemen are capable of eliminating discrepancies in quantity that is distributed. This is
done by breaking the bulk that is dividing a huge lot into small fractions.
4. Middlemen are capable of eliminating discrepancies in assortments. This happens when
different manufacturers produce a variety of items that become parts of another product or
each part is demanded separately as spares.
5. The producer can concentrate on the production function leaving the marketing problem to
the middlemen who specializes in the line.

45

6. The finance required for organizing marketing could profitably be used in production
where the rate of return would be greater.
7. The chief connection of selling intermediaries it to assemble to e goods from and many
producers in such a manner that a customer could affect purchase with ease. According to
Wore Alderson the goal of marketing is the catching of segments of supply and demand. The
matching process is undertaking by performing the following functions:

Contacting: Contacting purchasers or potential of the product.

Sorting:

Buying a large number of products in large quantities and then dividing and

rearranging them into suitable combinations; for the buyer.

Stimulating demand: help to sell merchandise through personal selling and advertising
Maintaining inventory: Stocking of goods at all times closer to the plight of purchase.
Transmitting marketing information: X serves as conduct information flowing between the
market and the manufacturer.
IN short middleman, have to perform connection Equalization and dispersion functions
of marketing
8. Middleman collects huge orders and purchase products in bulk form the producers. This
enables a manufacture to undertake large-scale production.
9. The main function of middlemen is to provide the connecting link between the producers
and their respective markets.
10. Middleman helps to stabilize the price too. By stocking goods constant of gods to the
markets is assured. This equalizes demand and supply factors, which stabilizes prices not
only in a sign, single market but also maintains the same price level in all markets
11. Middlemen create place, time and possession utilities to the products.

46

Thus under the present complex system of production and distribution middlemen n appear to
the indispensable and inevitable. Industry and commerce are soil specialized these days that
the producers a cannot do full justice to every minute of production and distribution. For this
reason, they have some people specialized in the different adjuncts; of production and
distribution, so that their enterprise my may be crowned with success.
There were no such specialized people; the producers would have to be; so busy with all
details of production and distribution they would hardly find any time to devote their
attention to the other vital requirements of business. This proportion becomes all the more
difficult in a competitive field where the question is of the Survival of the fittest in short,
the services rendered by middlemen t to the producers and consumers in general are of
immense valuepa
CLASSIFICATION OF MIDDLEMEN
A few kinds of special middlemen occupying the trade channel were defined earlier in this
chapter. A proper classification and discussion is making hereto analyze their individual
position in the channel and their activities.

WHOLESALERS:
Wholesalers occupy a predominant position I the channels of distribution. This is more so in
a widespread economy, where the wholesaling function is of vital importance.

They

assemble merchandise from many sources, warehouse4 it, and regroup the goods for
convenient buying by retailers. Sort modern wholesale merchants provide information and
advisory services to retailers, and they are often in a position to provide local market
information to manufacturers as well. Their most important services, of course is that of
marking it possible for the4 manufactures ;to sell ;to thousands of ;small ;retailers to whom
;the ;merchandise cannot to sold direct form ;the factory. This is more so because of their
lack of sources and storage space to purchase in larvae quantities to make such direct
purchase economically feasible. ON the basis of function they performed, wholesalers could
be groups as follows

47

1. Limited function wholesalers:

They are basically merchant wholesaler but do not provide fully service, and often provide
only; the minimum services among limited functions. Wholesalers of certain types stand out
and have become trade institutions, which are as follows:
a. Wagon or truck jobbers: as the name implies a wagon and truck jobber sells from his
wagon. His main contribution is that he covers wide rural territories and distributes perish;
able goods to small and often out-of-the way retail customers.
B Rack Jobbers: these are wholesaling units that market specialized lines of merchandise to
certain types of stores only. They keep their merchandise in tracks, and the retail buyers are
allowed to get their for themselves. They concentrate mainly on food items and therefore, are
helpful for supermarkets.
c. Cash and carry jobbers: as the name suggests, the wholesalers do not allow any credit
facilities to retailers. Naturally, their operations are less costly and the price of products is
also low.
d Mail order wholesalers: these wholesalers sell through the medium of post. They were
necessary in times when transport and communication were under developed. With the
modern improvement in these fields their importance has considerably decreases.
2. GENERAL MERCHANDISE WHOLESALERS:
Such a wholesaler never restricts the varieties of products to be handled. Hew may even
handle unrelated products lines. These kinds of middlemen are fast disappearing from the
city areas since all fields are gradualoly6 getting specialized.
3. GENERAL LINE WHOLESALERS:
Contrary to the above kind of wholesalers, they deal in closely related items. IN industrial
goods marketing, these wholesalers are known as Industrial distributors. This kind of
wholesalers is found in hardware and automobile spare parts business.

48

Specialty wholesalers:
As the name suggests this kind of wholesalers have introduced specialization in the wholesale
trade. Such a wholesaler deals only in one merchandise. But within that limited line he
might offer the who le range also specialize in concentrating on the products of a single or a
special group of manufactures. This will enable him to get all support from manufacturers
including the sales promotional supportspa
4. FUNCTIONAL WHOLESALERS/MIDDLEMEN
This kind of wholesalers actually falls under the category of agent middleman. They do not
take title to merchandise nor do they see goods they sell. Their main functions to facilitate
selling, although there are some buying functional middlemen. They are classified as:
a. Brokers: this group operates to bring the buyers and the seller together. Brokers are
especially important in the food, textile, and real estate and in second hand machinery
markets. Primarily, brokers sell information. Information of products available for sale or
purchase.
b. Drop-shipment wholesalers: through by nature they are also wholesalers, they; do not
handle the goods; they sell. They simply collect orders from retailers and pass them on to the
retailer such wholesaling functions, with the 0065ceptgion of storage and handling
c. Commission merchants: they ;are mostly found in the agricultural marketing field and
handle the selling function for large numbers ;of products Like the broke a commission
merchant finds markets for the products. But unlike; the broker, he generally handles the
goods he sells but does not own them,. Consequent on the emergence; of co-operative
marketing in the agricultural se4dtor in recent years, the importance of these merchants has
declined
d. Manufactures; agents: these; agents; wor4k for several; no competing manufacturers and
act as sales representatives for them in a territory, Their main job is to call on and sell to
wholesalers and industrial buyers. As a; rule, the manufactures and agent does not handle

49

goods. He sends the orders; to the; manufacturers who in turn deliver the; products directly;
to buyers.
f Selling agents: like the manufacturers agents willing agents sell for ;the manufacturers but
usually ;handle the entire output of such manufacturers. They take over the entire marketing
job for a commission.

The selling agent prominent in the textile and drugs and

pharmaceutical industries, where many small producers have to sell products fast and at the
lowest possible cost.
a. Converters: they operate both as manufacturers and wholesalers. But their production
operation would be simple, concentrating more on selling. This is found in textile; industry6,
where the raw cotton is brought and after dyeing, printing etc. finished cloth is sold. This
kind of wholesalers is rarely found in India.
b. Assemblers: their specification is in the agricultural field. Some are agent middlemen and
some are merchant middlemen, and in most cases they combine both the types. Their main
job is assembling goods from various places.
CHANNEL MANAGEMENT
The selection of marketing channel systems by manufacturers is one of the most critical
marketing decisions to be made. It is strategic decision. The objective of this strategic action
is to place the firm and its products into a market position which is very safe.
The channel decision has far-reaching consequences and even affects the manufactures mix.
For ex: the producers freedom of pricing is limited by the trade discount arranged with
resellers. His advertising and use of personal selling are influenced by the role of the
middlemen promoting his brands. Even the products features or its packing may be affected
buy the assortment of needs and merchandising policies of important sellers. Consequently
the channel decision represe4nts one of the; most important decisions a manufacturers must
make and therefore, a decision that deserves extensive analysis and careful planning.
Two basic goals are commonly pointed out:

50

1. The achievement of a sufficiently board product availability in the market. This would
assure ready exposure of the product to potential buyers.
2. The creation of uninterrupted trading relationships with the middlemen. These goods are
often described as long-range goal of channel management. On the basis of this short-run
channel objectives are established. They are,
A. Coverage of geographical markets to ensure prompt and quick delivery.
B. Coverage of important resellers this will ensure product availability over a wide area.
C. Coverage of personal selling support.
D. Effective sales promotion.
CHANNEL OPTIONS:
The second stage in the channel management is to choose from among the various adoptions
available. The options are made on the basis of
1. The degree of directness or number of levels of middlemen to be in the channel.
2. The degree of selectivity number of middlemen required in a specified area.
3. The types of middlemen what types of wholesalers, retailers and facilitation middleman are
needed.
4. The number of separate distribution channels.
5. The choice of the individual middlemen.
As pointed out earlier channel decision is not permanent and requires constant evaluation,
improvements, changes and abolition of channel altogether; might become necessary in the
course of time. On the basis of the natur5e of products also, these channels may take
different forms. A common of general approach is neither feasible nor practicable.
A few practical hints on channel selection are given below:

51

1. In case where a manufacturer product are frequently purchases the best course for him
would be to adopt direct distribution.
2. Fashionable and perishable commodities usually must be placed in the hands of final
sellers as quickly as possible. Especially departmental; stores are the best channels in their
case.
3. In the case of goods, which require technical knowledge or skills for sales, maintenance,
repairs, etc.the channel ;must be selective in ;nature. Middlemen also could be used provided
they could offer these services efficiently.
4. Goods with high unit cost are sold more directly and selectively; as also; they bulk ones.
For branded able products, multiple shops would be the best channels.
5 because of widely spread market and low unit value, the convenience goods may be
distributed through intensive channels.
6. The length of the product line would compact direct sales. It is the case whe3n customers
are concentrated geographically.
7. The shopping goods are usually of high unit value of tend and involve a style element
therefore they tend to use more direct and selective channels. The channel objectives must be
maximization of sales good will and control and minimization of costs. These objectives are
of course conflicting in nature buy finally depending on the market marketing mix resources
and environment factors. They are more o less permanent in nature. An understanding of
these factors will enable a person to make a proper and selection of channel for his product.

TYPES OF CHANNELS
1. PRODUCER ------- CONSUMER

52

2. PRODUCER ------- RETAILER ------ CONSUMER

3. PRODUCER ------- WHOLESALER ---- RETAILER ----- CONSUMER

4. PRODUCER ------ AGENTS ------------ RETAILER ----- CONSUMER

CHANNEL FOR INDUSTRIAL PRODUCTS;

1. PRODUCER----- INDUSTRIAL USER

2. PRODUCER ----- INDUSTRIAL DISTRIBUTOR -----. USER

3. PRODUCER----- AGENTS----------------------------- USER

4. PRODUCER----- AGENTS-------INDUSTRIAL DISTRIBUTORS----- USER

FACTORS AFFECTING THE CHOICE OF DISTRIBUTION CHANNEL

1. Market Consideration

53

This include the nature of market

The nature of potential customers
Geographical concentration of the ;market
Order and size
Customer buying and wealth
2. Product Consideration
a. Unit Sale value
b .Bulk and weight
c. Technical nature of the product
d. The broader the product line, the shorter shall be the channel
e. If the product is custom make
3. Company Consideration
A. Financial sound companies
B. Desire for control of channel
4. Middlemen Consideration
a. Services
b. Maximum Sales volume
c. Choice of sales/channels
5. Consumer Consideration

54

a. Consumer4 requirements
b. Convenient location
SELECTION OF CHANNEL FOR NEW PRODUCT:
1. Consumer realizes they want it.
2. Aggressive promotion is needed.
3. All possible efforts will have to be made.
CHANGE IN CHANNELS OF DISTRIBUTION
1. The development of bett3er and cheaper means of transport.
2. The growing importance of branded
3. Controlling of facts and distribution
4. Development of retail trade.
5. The population growth and movement within the country.
6. Conditions of business and market changes.
7. Remodel or change of the flow of goods.

55

CHAPTER-5
DATA ANALYSIS AND INTERPRETATION

56

BUYING PATTERN OF THE CONSUMERS

Buying Pattern

% of consumers

Milk Booth

38

Door Delivery

31

Kirana shops

24

Dept stores

Local Vendors

Parlors

INTERPRETATION
The above graph shows the buying pattern of the consumers. We observed that majority of
the consumers buy the milk from milk booths while very few from dept stores. 24 percent of

57

the customers buy the milk from kirana shops where as 6 percent of the customers were
buying from local vendors.
THE QUANTITY OF MILK USED PER DAY

Quantity

Percentage

5 to 2 Ltr

85

1 to 2 Ltr

13

Less than 0.5 Ltr

85
90
80
70
60
50
40
30
20
10
0

13
2

05 to 2 Ltr

1to 2Ltr

Lessthan 0.5Ltr

Percentage

INTERPRETATION
We observed that 85 percent of the consumers were using the milk of quantity 0.5 to 1 litre
where as 13 percent of the consumers are using milk of quantity1to 2 litres and only 2 percent
are using less than half litre.

58

THE PRICE OF MILK THAT CONSUMERS ARE USING NOW

Price per Ltr

Percentage

22

36

18

56

17

56

60
36

50
40
30

20
10
0

22

18

17

Percentage

INTERPRETATION
It is observed that 36 percent of the people were buying the milk per litre for Rs 22 and 56
percent of people were buying the milk per litre for Rs 18.Only 8 percent of the people were
buying the milk per litre for Rs 17. So majority of people were buying the milk for Rs 18 per
litre.

59

AWARE OF MILK PRODUCTS

Product

Percentage

Milk

100

Curd

100

Butter Milk

44

Sweets

22

Ghee

14

Flavored Milk

100

100

100
90
80
70
60
44

50
40

22

30

14

20

10
0

Milk

Curd

ButterMilk

Sweets

Percentage

INTERPRETATION

60

Ghee

Flavored
milk

Almost every customer knew about the milk and curd of Visakha Dairy. Buttermilk was the
second most known product i.e., 44% knew about it. Flavored milk was known to very few
customers only.

THE FACTOR THAT MOTIVATES THE CONSUMERS TO BUY THAT BRAND

Factor

Percentage

Taste/quality

75

Easy availabilities

10

Packing Design

Advertisements

75
80
70
60
50
40
30

10

20

10
0

Taste/Quality

Easy Availability Packing/Design

Percentage

INTERPRETATION

61

Advertisement

It is observed that 75 percent of the customers consider the quality where as10 percent
consider easy availability of the product ,8 percent advertisement and 7 percent consider
packing/design.

HAVE YOU EVER USED VISAKHA DAIRY PRODUCTS

Percentage
Yes

82

No

18

62

INTERPRETATION
The total sample size was 150 customers, In that 82% of customers answered that they have
used the Visakha Dairy products. But only 18% of people said no.

MONTHLY INCOME OF THE CUSTOMER

Monthly Income

Percentage

1000-5000

14

5000-10000

66

10000-15000

12

More than 15000

63

INTERPRETATION
The market survey revealed the income of the customers as follows.66 percent of the
customers are earning 5 to 10 thousand rupees per month, where as 14% are earning 1 to 5
thousand rupees per month, 10 to 15 thousand rupees per month are 12% .The customers who
are earning more than 15 thousand rupees per month are 8%.

ARE YOU SELLING MILK PRODUCTS?

Opinion

No of Respondents

Percentage

YES

135

90%

NO

15

10%

TOTAL

150

100%

64

INTERPRETATION
From the above we can derive at the maximum percentage i.e.,90% of the respondents are
selling milk and milk products and 10% of the respondents are not selling milk and milk
products.

65

HOW LONG HAVE YOU BEEN USING THESE MILK PRODUCTS?

Years

Percentage

10

37%

21%

17%

15%

INTERPRETATION

Percentage
40%
35%
30%
25%
20%

Percentage

15%
10%
5%
0%
10 years

5years

3years

2 years

From the above it is observed that 37% of retailers are selling Visakha dairy from 10 years,
21% of the retailers are selling Visakha dairy from five years, 17% of retailers are selling
Visakha dairy from 3 years, 15% of retailers are selling Visakha dairy from 2 years. So we
concluded that majority of the retailers are selling Visakha dairy products for the quality.

66

HOW IS THE QUALITY OF VISAKHA DAIRY MILK PRODUCTS?

Good

47%

Satisfactory

36%

Poor

7%

INTERPRETATION
From the above it is evident that 47% of Retailers say it is excellent in quality, 36% of
Retailers say it is satisfactory, 7% of Retailers say it is poor in quality.

67

WHAT IS YOUR OPINION ABOUT THE PRICE OF VISAKHA DAIRY MILK

PRODUCTS?

Price

Percentage

HIGH

9%

RESONABLE

57%

LOW

245

High, 9%
Low, 24%

Reasonable,
57%

INTERPRETATION

68

From the above it is evident that 57% of Retailers say it is reasonable in price,while24% of
Retailers say it is high in price and9% say it is low in price.

HAS VISAKHA DAIRY PROVIDED ANY COLD CHAIN FACILITIES?

Yes

77%

No

13%

INTERPRETATION
From the above it is evident that 77% of Retailers say Visakha dairy provide any cold chain
facility, 13% of Retailers say Visakha dairy does not provide any cold chain facility

69

HOW OFTEN DOES VISAKHA DAIRY MARKETING PEOPLE VISIT YOUR

PREMISES?

Daily

39%

Alternative days

20%

Once week

9%

Twice a week

10%

Fortnightly

7%

Monthly

5%

70

INTERPRETATION
From the above we can evident that 39% of visakha dairy marketing people visit premises
daily, while 20% on Alternatives days, while 9% once a week and 10% twice a week and 7%
fortnightly and 5% monthly.

WHICH PRODUCT HAS A MAXIMUM SALE?

UHT Milk

37%

Butter milk

23%

Curd

12%

Lassi

10%

Other

18%

71

INTERPRETATION
The sales analysis of Visakha dairy products shows that 37% of customers buying UHT milk,
23% buy butter milk, 12% buy curd and 10% buy Lassi and other products.

ARE YOU SATISFIED WITH COMMISSION OFFERED BY VISAKHA DAIRY TO

SELL THEIR PRODUCTS?

No, 17%

Yes
No

Yes, 73%

72

INTERPRETATION
From the above it is observed that 73% of the retailers are satisfied with commission offered
by Visakha dairy.

OUR OPINION ABOUT THE PRESENT DISTRIBUTION CHANNEL OF VISAKHA

DAIRY?

Excellent

21%

Good

47%

Satisfactory

13%

Poor

9%

Poor, 9%

Excellent, 21%

Satisfactory, 13%

Good, 47%

INTERPRETATION

73

In the above graph47% of the retailers are saying that the distribution channel of Visakha
dairy is good,21% of the retailers are saying that the distribution channel of Visakha dairy is
excellent. In the above graph13% of the retailers are saying that the distribution channel of
Visakha dairy is satisfactory. In the above graph9% of the retailers are saying that the
distribution channel of Visakha dairy is poor.

HAVE YOU FACE ANY PROBLEMS WITH HE PRODUCTS OF VISAKHA DAIRY?

Yes

18%

No

72%

INTERPRETATION

74

In this majority of the retailers are not having problem with the products of Visakha dairy.

ARE YOU SATISFIED WITH THE PROMOTIONAL SCHEME OFFERED BY

VISAKHA DAIRY?

Yes

74

No

26

75

INTERPRETATION
In this74% of the retailers are satisfied with the promotional schemes offered by Visakha
dairy.

SPECIFY THE MILK PRODUCTS WHICH YOU ARE SELLING?

Milk

47%

Curd

15%

Buttermilk

10%

76

Badam milk

13%

Lassi

5%

INTERPRETATION
The sales analysis of various Dairy products shows that47% of customers buying milk, 15%
of customer buying curd, 10% of customers buying buttermilk, 15% of customers buying
badam milk and 5% of customers buying Lassi and other products.

DO YOU HAVE ANY COLD CHAIN FACILITIES?

Yes

67%

No

23%

77

No, 23

Yes, 67

INTERPRETATION
From the above it is evident that 67% of Retailers have cold chain facilities and 23%
Retailers have no cold chain facilities

HOW DO YOU PLACE AN ORDER FOR THE STOCK?

Over the phone

7%

Send a person

27%

78

Through sales vehicles

9%

Representative of vd, Collects the 47%

indent

INTERPRETATION
From the above it is evident that 47% of retailers say that Representative of Visakha dairy
collects the indent, while 27 send a person and 9% through sales vehicle and only 7% over
the phone.

HOW FAST DO YOU GET THE STOCK?

79

Same day

37%

Immediate receipt of the day

23%

Next day

20%

After 1 day

7%

After 2 days

3%

INTERPRETATION
From the above it is evident that 37% of retailers say that they get stock on same day while
23% retailers say immediate. Receipt of the order, 20% says next day and 7% say that after 1
day and3% after two days.

80

CHAPTER-6
Findings
Suggestions

FINDINGS OF THE STUDY

81

Majority of the Visakha dairy distributors are satisfied with the promotional schemes offered
by the Visakha dairy.

More than 84%of the Distributors are satisfied with the commission offered by Visakha
dairy.

Most of the Distributors are giving preference for quality and regular supply among the
various factors for selling milk.

Visakha dairy milk products are having maximum sales.

Maximum numbers of distributors are saying that they face leakage problem rarely.

82

SUGGESTIONS
It was observed that majority of the people are buying the milk from milk booths. So its
better to improve the services to the customers in milk booths.

Most of the customers were using half liter per day, very few customers were

using more

than one liter of milk per day.

From research we find that majority of the people were buying the milk for Rs 18 per liter .So
its better to improve the production of milk for Rs. 18 in order to satisfy.

Out of 150 samples, all the people were aware of Visakha Dairy. Next to Visakha Dairy was
the well known brand. So we find that Visakha Dairy was a well known and a notified brand.

Among all the brands of milk products maximum people were using Visakha Dairy products.
After this Heritage was the well known and competitive brand for Visakha Dairy. In order to
maintain its market shares Visakha Dairy. In order to maintain its market share Visakha
Dairy has to maintain its quality.

Taste/quality was one of the factors the customers to buy the particular brand. Easy
availability and advertisement were also one of the factors to buy the particular brand
products.

83

The market survey conducted by me has reveled that most of the people were aware of
Visakha Dairy milk and milk products

One of the advertising media followed by the Visakha Dairy was paintings. This has
occupied a great position in crating awareness of the Visakha Dairy brand. So its necessary
to take care on paintings. Addition to these banners was also playing an important role an
important role in awareness brand. The role of newspapers, hording, pamphlets were very
less.

84

CONCLUSION
Inspire of all the above inadequacies, which are highlighted in the suggestions the Visakha
dairy has a good brand image and brand loyalty among the customers. All the employees are
target-oriented in their respective fields. They created a congenial working environment and
working with co-ordination to achieve the ultimate targets of the Visakha dairy.
The organization should motivate its commission agent to the almost possible extent to it .it
has to develop its promotion activities. New methods of advertising i.e. using the media of
advertising more efficiently and innovatively should be done. Customers should be made
aware of the product mix of Visakha dairy and other products, which they are selling.

85

BIBLIOGRAPHY

BIBLIOGRAPHY

86

Marketing management: Philip kottler

Marketing management: Ramaswamy & namakumari

A brief note on VC

:internal records of the dairyinformation gathered though internet

web sites are:

www.discovermik.co.uk
www.apdairy.com
www.dairy .com

87

Questionnaire

88

QUESTIONNAIRE TO THE CUSTOMERS

Name:
No of family members:
Occupation:
Questions:
1. Which brand of milk are you using?
a. Visakha dairy b.Dolphin
d. Ajay

e.City milk

c.Heritage

f.Kamadhenu

2. Are you aware of the variety of products of Visakha dairy? If yes specify
a. milk b. ghee c.doodh peda d.flavoured e. lassie f. buttermilk g. milk powder

3. Which of the products are you using regularly?

a. Milk b.ghee c. doodh peda d.flavored milk e. lessi f. buttermilk g. milk powder
h.cooking butter.

4. What do you feel about the quality of the milk/milk product of visakha dairy?
a. Good b.satisfactory

c.low

89

5. How would you availability of products of vcd?

a. Good b. satisfactory c.low

6. Have you come across of vcd?

A. Hoardings b. TV c. news paper d. painting e.sign boards f. exbitions
7.Do you thing that any schemes are require to increase sales? If yes, any
recommendation
8.Do you thing the ads are having recall rate?
A.yes b. no

9. Should more information be mentioned in advertising?

A.Yes b.No.

10.How much quantity of milk do you use daily?

A.1/2 lts b.1 lts c.1 lts to 2 lts d. 2 lts to 3 lts

11.Which factors do you consider to purchase milk?

a. Quality b.price c.packing d. easy availability e. timely availability

90

12. Which brand do you purchase regularly?

a. Local vendor b. revathi c.heritage d.Visakha dairy e.city milk f. Vijay

13. Do you with Visakha dairy to introduce any new product?

A)yes

B)no

14.Are you satisfied with the services offered by the visakha dairy?
A.yes b. no.

15. Any complaints

a. Shortage in quantity
b.Door delivery
C.Spoilage
d.Leakage
e.Booth agents

16.Any suggestion to visakha dairy?

QUESTIONNAIRE TO THE BOOTH AGENTS

91

Name:
Place:
Booth number:
Questions:
1.Which brand of milk are you selling? ()
a. Visakha dairy

b.dolphin

c.heritage

d.city milk

2.What are the products you are selling? ()

a. Milk

b. ghee

c. dood peda

d. lassi

e. buttermilk

3.Quantity of sales of milk?

Brand

Morning

Evening

4.Are you facing any problem with company regarding?

A.leackage
b. Less quantity
C.spoiling
D.receiving order in time, etc.

92

f. milk powder