A REPORT ONCHANNEL MANAGEMENT OF OMFED

Submitted by-Soumita patra(67)Nishith goenka(78)Shikha sinha(89)Sreeji s nair(100)

Lalsa kumara(111)Pritam P. Das(122)

ACKNOWLEDGEMENT

We thank Prof. Krishna Das Gupta who gave us the opportunity to

do this project and made us earn the knowledge of marketing

practically.

We would also like to thank the Marketing Manager of Omfed, Mr.

Raj, owner of Raj Enterprises, and Mr. Rajeev Hans, distributor of

Amul, for providing us the details about the company and its

distribution process and helped in completion of this project without

whose help we could not have completed this project. And our

special thanks to those who directly or indirectly supported us to

complete this project successfully.

CONTENTS1. Introduction

1.1 Objective

1.2 Achievement

1.3 Branches of company

2. Product Mix2.1 Width2.2 Length2.3 Depth2.4 Consistency

3. Methodology

3.1 Findings 3.1.A At retailer level 3.1.B At distributor level

4. Channel Distribution

OMFED Amul

5. Conclusion

6.Recommendation

Appendix I

Appendix II

EXECUTIVE SUMMARYAs per the survey conducted with OMFED, the details on distribution channel,

margins allowed to distributors and retailers, the product mix, the fast moving

and slow moving products were obtained.

OMFED has two distribution channels – direct distribution to their booth and

though the distributors to the retailers. OMFED distributes its products through

distributors to the retailers. They allow a margin of about 15% to 20% to the

retailers whereas 8% to 10% to its distributors. The Company does not indulge in

promotion schemes for its existing and fast moving brands. However, for new

brands they have promotion schemes.

Maximum revenue is generated from curd. Fast moving products are milk, ghee

and curd, and slow moving brands are flavored milk, cold coffee and Delight Juice.

OMFED has a replacement policy for damaged goods provided it is within the

expiry date. The whole process of replacement takes about 20 days.

Usually distributors of OMFED don’t keep the stock with them. They directly take

products from the company and distribute to the retailers as per the advance

orders received.

Comparing OMFED with Amul, the latter has only one channel of distribution –

distributor to the retailers. The profit margin for the distributor is 9% and for

retailers it is 7.5%. Amulspray generates maximum revenue and it is also the fast

moving brand of Amul.

1. INTRODUCTION OMFED comes under The Orissa State Co-operative Milk Producers’

Federation Ltd., the present Chairman cum MD is Dr Hrusikesh Panda.

The OMFED product categorizes into milk and milk product,

horticulture product, khandhamal organic product ,cattle fed product,

though OMFED is known as one of the premier milk producer

OMFED marketing area is divided into twelve zones all over Orissa.

The corporate office is in Shahid Nagar, Bhubaneswar and the zones are

in, Rourkela, Sambalpur, Balasore, Dhenkanal, Jaypore, Tangi,

Berhampur, Keonjhar, Tirtol, Cuttack, Bhawanipatna, and the fruit

processing is situated in Samantarapur, Bhubaneswar.

1.1 ObjectivesTo carry out activities for promoting production, procurement,

processing and marketing of milk & milk products for economic

development of the rural farming community. Development and

expansion of such allied activities as may be conducive for the

promotion of the dairy industry. Improvement and protection of milch

animals and economic betterment of those engaged in milk production.

In particular and without prejudice to the generality of the forgoing

objective, the federation may Purchase and/or erect building, plant

machinery and other ancillary objects to carry out business. Study

problems of mutual interest related to procurement, marketing of dairy

and allied products. Purchase commodities from the members of other

sources without affecting the interest of the members, process,

manufacture, distribute and sell them same, arrange to manufacture /

purchase and   distribute balanced cattle feed and for the purpose to set

up Milk collection and chilling centers, Milk   Processing Plants,

Product factories etc, in any of the district covered under its area of

operation. Provide veterinary aid and artificial insemination services and

to undertake animal husbandry activities so as to improve animal health

care disease control facilities. Advice, guide and assists the Milk Union

in all respects of management, supervision audit functions. Render

technical, administrative, financial and other necessary assistance to the

member unions and enter in to collaboration agreement with someone, if

the need arises. Advise the member unions on price fixations, public

relation and allied matters

1.2 Achievements: The year of operation started from 1997 and it achieved great height in sale of milk &milk product .The organization dcs increased from 1016 to 4387 in the year 2007-08. Farmer membership also increased from

92476 to 236199 from the starting year to 2008 .milk procurement increased from 76770 to 360256

1.3 Branches of OMFED factory and its corporate office.

2. PRODUCTS MIX

Product mix is a combination of products manufactured or traded by the same business house to reinforce their presence in the market, increase market share and increase the turnover for more profitability. Normally the product mix is within the synergy of other products for a medium size organization. However large groups of Industries may have diversified products within core competency. One of the realities of business is that most firms deal with multi-products .This helps a firm diffuse its risk across different product groups/Also it enables the firm to appeal to a much larger group of customers or to different needs of the same customer group .It sought to satisfy the needs of the middle and upper middle income group of consumers. In other words it’s a composite of products offered for sale by a firm. And OMFED is very perfect example of this.

Product mix of OMFED can de determined on the basis its:-

2.1 Width The width of a product mix refers to how many different product lines the company carries.

Milk & Milk Products Horticulture Products Khandamala Organic Products Cattle feed

2.2 Length

The length of a product mix refers to the total number of items in the mix.

Milk & Milk product

Omfed peda

Skimmed Milk

Cow Milk

Cold Coffee

Sweetened Flavoured Milk

Butter milk

Ghee

Sweet curd

Plain Curd

Milk Curd

Table Butter

Lassi

Chennapod

Cottage Cheese (Paneer)

Kheera

Horticulture Products

Omfed Delight

Lemon Ginger

Squash

Jam

Sauce

Pickle

Kamdhamal Products

Kandhamal Organic Turmeric Powder

Musturd Seed

Honey

Cattle Feed

Cattle Feed

Mineral Mixture

3.3 Depth The depth of a product mix refers to how many variants are offered of each product in the line.

Ghee1 ltr.500 Ml.200 Ml.15 Ltr.

 

jar jar jar jar

 No.No.No.No.

 256.0132.055.002950.

 

Plain Curd200 Gram.500 Gram.

 Plastic

Poly Pouch

 One cup

 

 13.0026.00

Table Butter500 Gram.100 Gram.

 PackPack

 NoNo

 87.0018.00

 

  Chennapod             

  500 Gram.   V.Pack   No  50.00 

  250 Gram.   V.Pack   No  27.00 

100 Gram. V.Pack No 12.00

 

Cottage Cheese (Paneer)10 Kg 500 Gram200 Gram

 BLOCK  V.Pack  V.Pack

 NoNoNo

 105.0 60.0026.00

       

Omfed Delight (200 ml.)

Pineapple Delight

Pineapple Delight

Orange Delight

Orange Delight

 

Sachet

Bottle

Sachet

Bottle

 

No.

No.

No

No

 

7.00

10.00

7.00

10.00

         

 

  Lemon Ginger

 

200 Gm.

200 Gm.

 

 

 

 

Pouch

Bottle

 

No      7.00

No     10.00

 

 

Squash (700 ml.)

Orange

Pineapple

 

Pet - bottle

Pet - bottle

 

No.

No.

 

54.00

54.00

         

 

Jam

Mixed/Pineapple

Mixed/Pineapple

 

GlassBottle

GlassBottle

 

500gm

200gm

 

52.00

26.00

         

 

Sauce

Tomato 500 Gm.

Tomato 200 Gm.

Chilli 500 Gm.

Chilli 200 Gm.

 

Glass-Bottle

Glass-Bottle

Glass-Bottle

Glass-Bottle

 

No.

No.

No.

No.

 

45.00

22.00

37.00

20.00

         

 

Pickle

Mango/Lemon/Mix/Mango(H&S)

Mango/Lemon/Mix/Mango(H&S)

Mango/Lemon/Mix/Mango(H&S)

 

Plastic Jar

Plastic Jar

Plastic Jar

 

400gm

200gm

5 Kg

 

40.00

20.00

200.00

       

Kandhamal Organic Turmeric Powder

(100 Gm.)

(200 Gm.)

(500 Gm.)

 

 

Packet

Packet

Packet

 

.

No.

No

No

 

 

11.00

20.00

45.00

2.4 Consistency The consistency of the product mix refers to how closely related the various product lines are in end use, production requirements, distribution channels, or some other way.

Product Mix of Amul, which is the nearest competitor of OMFED in the BBSR market. Some of the products are listed below:

Amul Butter 100g Rs.19

500g Rs.92

Amul Pure Ghee 500ml. Pouch Rs.95

1ltr. Tin Rs.190

2ltr. Rs.375

5ltr. Rs.925

Amul Tazza Milk 1ltr. Pkt. Rs.32

Amul Kool 200ml. Rs.12

(Kesar, Elaichi, Rose, Chocolate)

Amul Kool Café 200ml. Rs.15

Powder Milk : Amul Spray infant Milk Food

Instant Full Cream Milk Powder

Sagar skimmed Milk Powder

Sagar Tea Coffee whitener

Amulaya Dairy whitener

Fresh Milk : Amul Fresh milk

Gold Milk

Tazza Double Toned Milk

Lite Slim & Trim Milk

Fresh Cream

Shakti Tonned Milk

Calci+

Cheese : Pasteurised Processed Cheese

Cheese Spreads

Emmental Cheese

Pizza Mozzarella Cheese

Gouda Cheese

Cooking : Amul sagar Pure Ghee

3. METHODOLOGY

A preliminary survey was conducted with

A : Marketing Manager, OMFED, BBSR

B : RAJ ENTERPRISES in front of SCHOOL OF TECHNOLOGY,

KIIT, BBSR, Who are distributors as well as retailers of the

OMFED.

C : Mr. Rajeev Hans, Kaluram & Sons(Distributor), Amul.

3.1 FindingsA. At the retailer level:

I. Milk, Ghee and Paneer are the fast moving products of OMFED. The demand for this products are much above the company’s production capacity, retailers have to place orders, especially Ghee well in advance. Plain Curd and sweet curd are relatively fast moving products all over the year, but in the summer season demand is higher. During summer season, Lassi, Butter Milk, Pouch curd are the most demanded products. Flavored Milk, Cold Coffee Delight. Juices are slow moving products as the price is higher sa compared to its competitors.Amul spray is the fast moving product of amul.

II. MARGIN : Margin allow the retailer to vary in the range of 15% to 20%. The detailed list of margins on various products are shown in Appendix I.

Amul the competitor of omfed offers anout 7.5% margin to the retailers.

III. PROMOTION : The company shows least interest in promotion of milk & its products as they are unable to meet the demand however to promote a new brand called “Delight”, the company is offering two bottles of delight with one cartoon of flavored milk(1cartoon =24 Bottles) and one delight with 1 kg of Ghee.

IV. MARGIN COMPARISION TO RIVAL BRANDS : At this level OMFED gives 15-20% profit margin but in the case of Amul retailers margin is 7.5%.

V. WINDOW DISPLAY AND MERCHANDIZING : Glow sign boards & banners are offered at subsidized rate to the retailers. The company does not believe in window display through retailer but they encourage it in OMFED Booths.

VI. RECORDING FREQUENCY : As the milk & its products are temperature controlled refrigerator beyond items, recording frequency is much higher. In case of flavored Milk, Cold Coffee & Ghee they have a long shelf life for which they are organized at a frequency of 1 week.

VII. PAYMENT TERMS AND CONDITIONS, CREDIT POLICY : No credit facility is provided to the retailers. The payment system is cash on delivery.

VIII. CASH AND VOLUME DISCOUNT : No cash & volume discount are given to retailers.

IX. DAMAGE GOODS POLICY : The company has the policy of replacing damaged goods if it falls within the expiry date. After expiry date the loss has to be borne by the retailers. The whole process of replacing damaged goods which are within expiry date to 30 days.

B. At the distributer level:

I. MARGIN ALLOWED : Margins allowed to distributor in low as comaperd to retailer, the range varies from 8%-10%. The detailed list of margin in shown in Appendix II.

II. NUMBER OF DISTRIBUTORS/CRITERIA: There are 12 distributors in BBSR. The criteria in decided by the company, and it changes time to time. They look at place of any existing distributors. Distributors must have there own salesperson & transportation. The distributor who has the thin line is given the highest weightage.

III. REORDERING FREQUENCY : normally distributor don’t stock products with them as they are of perishable nature. So, they visit factory daily & purchase as per the retailers demand.

IV. COMPANY SUPPORT : No support is given by the company. A distributor has to employee a salesperson at his own cost and also has to keep a vehicle for delivering the products to the retailers.

V. DISCOUNT ALLOWED : No cash & volume discount are given to Distributors.

VI. MANAGING DAMAGE GOODS : Usually they don’t keep stock with them, in case they keep the product is replaced if it is within expiry date.

VII. LOCAL PROMOTION : No local promotion is done by the distributor, they only promote offers given by the company.

VIII. FREIGHT CHARGES : It is borne by the distributor. A distributor has to collect product from the company and distribute it to the retailers as per their advance order.

4. CHANNEL DISTRIBUTION OF OMFED AND AMULOMFED has two channels of distribution. They adopt direct distribution

to OMFED booths and through distributors to retailers; whereas Amul

has only one channel of distribution for its entire product, that is, through

distributors to the retailers. The distributor has to bear the transportation

cost for distributing the products to the retailers. They can also supply the

products to exclusive OMFED booths, but the transportation cost has to

be borne by them. The margin allowed to distributors, in case of

OMFED, is less compared to the retailers. But Amul has the policy of

allowing highest margin to the distributors as they have to bear the

transportation cost from the factory, which is situated outside Orissa, to

their godown and then to the retailers’ place. OMFED has 12 distributors

in Bhubaneswar for all its products and 4 exclusive distributors for Ghee.

Channels for exclusively OMFED booth

Company

Retailers

Consumers

Channels for other OMFED products, also the same channel followed by the Amul.

Company

Retailers

Consumers

Distributor

5. CONCLUSION

From this study we have found that how the profit is divided among

different channels and how the profit is calculated. Not only the profit

but we also came to know about how they manage their works such that

the consumers can get the best. Consistently the demand of OMFED is

increasing .Though the production level has been increased, but they

are not able to fulfill the demand of consumers. Another fact that is

deduced is being a local product OMFED as has high market share in

comparison to its rival brands. As it is a local producer so that it is

easily available in rural market too.

6. RECOMMENDATIONS

The production capacity of the existing plants should be

increased and new plants should be set up in other parts of the

state so that demand can be fulfilled all over the state.

They should take initiative in promoting animal husbandry to

increase the milk supply.

Milk can be procured from neighbouring states to fulfill the

demand.

Develop its network for procuring milk from rural areas.

Should focus on marketing for its slow moving products.

Should take initiative in consumer awareness programmes to

promote its products like Juice, Pickles, Honey, and Turmeric

Powder etc.