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The Indian Market - A Pyramid: the structure of the Indian dairy industry resembles a pyramid. The base forms the market for low cost milk, the body is the demand present in the urban market and the narrow tip comprises of westernized milk products.
Growing volumes: As the population grows so does the demand for milk.
The 3 A's of marketing
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The Indian Market - A Pyramid

India's dairy market is multi-layered. It's shaped like a pyramid with the base made up of a vast market for low-cost milk. The bulk of the demand for milk is among the poor in urban areas whose individual requirement is small, maybe a glassful for use as whitener for their tea and coffee. Nevertheless, it adds up to a sizable volume - millions of litres per day. In the major cities lies an immense growth potential for the modern sector. Presently, barely 778 out of 3,700 cities and towns are served by its milk distribution network, dispensing hygienically packed wholesome, quality pasteurized milk. According to one estimate, the packed milk segment would double in the next five years, giving both strength and volume to the modern sector. The narrow tip at the top is a small but affluent market for western type milk products.

Growing Volumes

The effective milk market is largely confined to urban areas, inhabited by over 25 per cent of the country's population. An estimated 50 per cent of the total milk produced is consumed here. By the end of the twentieth century, the urban population is expected to increase by more than 100 million to touch 364 million in 2000 a growth of about 40 per cent. The expected rise in urban population would be a boon to Indian dairying. Presently, the organized sector both cooperative and private and the traditional sector cater to this market.

The consumer access has become easier with the information revolution. The number of households with TV has increased from 23 million in 1989 to 45 million in 1995. About 34 per cent of these households in urban India have access to satellite television channel.

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Potential for further growth

Of the three A's of marketing - availability, acceptability and affordability, Indian dairying is already endowed with the first two.  People in India love to drink milk. Hence no efforts are needed to make it acceptable. Its availability is not a limitation either, because of the ample scope for increasing milk production, given the prevailing low yields from dairy cattle. It leaves the third vital marketing factor affordability. How to make milk affordable for the large majority with limited purchasing power? That is essence of the challenge. One practical way is to pack milk in small quantities of 250 ml or less in polythene sachets. Already, the glass bottle for retailing milk has given way to single-use sachets which are more economical. Another viable alternative is to sell small quantities of milk powder in mini-sachets, adequate for two cups of tea or coffee.

Marketing Strategy for 2000 AD

Two key elements of marketing strategy for 2000 AD are: Focus on strong  brands and, product mix expansion to include UHT milk, cheese, ice creams and spreads. The changing marketing trends will see the shift from generic products to the packaged quasi, regular and premium brands. The national brands will gradually edge out the regional brands or reduce their presence. The brand image can do wonders to a product's marketing as is evident from the words of Perfume Princess Coco Chanel: In the factory, we pack perfume; in the market, we sell hope!

Emerging Dairy Markets

  • Food service institutional market: It is growing at double the rate of consumer market
  • Defense market: An important growing market for quality products at reasonable prices
  • Ingredients market: A boom is forecast in the market of dairy products used as raw material in pharmaceutical and allied industries
  • Parlour market: The increasing away-from-home consumption trend opens new vistas for ready-to-serve dairy products which would ride piggyback on the fast food revolution sweeping the urban India.

India, with her sizable dairy industry growing rapidly and on the path of modernization, would have a place in the sun of prosperity for many decades to come. The one index to the statement is the fact that the projected total milk output over the next 15 years (1995-2010) would exceed 1457.6 million tonnes which is twice the total production of the past 15 years!

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