BCG Matrix of Amul

Cash Cows

When the market share of a product is high and it is being sold in an industry that had developed to such an extent that no significant growth is expected in future, then the product can be deemed as a Cash cow. Organizations use the cash cows to bring in revenues, while taking the benefit of the low investment needed to sustain the profitability of those products. The market share of these products is not likely to experience massive gains either, but the current position makes them a high revenue generator. There are two main products of Amul which can be placed in the category of cash cow, fresh milk and butter. The reason behind the selection of these products is that the industry for fresh milk and butter is not growing at a fast pace but gives the company with adequate chances of maintaining high profitability if the market share is high (Shashidhar, 2016). The brand offers three distinctive milk forms including cow milk, Amul gold and Amul Taaza. The business unit of butter aims to cater to the needs of people seeking healthier eating options by producing Amul lite. In addition, Amul butter and margarine targets the Indian consumers effectively (Shashidhar, 2016).

Stars

There are some products which have high market share and have the potential to grow more in the future. The industry dynamics are also supportive of the growth as the industry is in the phase of development as well. These products have the potential of being positioned as cash cows owing to the growth prospects. As far as star is concerned, ice creams manufactured by the company and ghee are the two key products which have the potential to grow taking benefit from the growth opportunities presented by the industry. The health conscious consumers have been targeted by the ice cream providing them with the option of ice creams that do not contain sugar. The ice cream with probiotics is another indication of the way the sweet milk based dessert has helped the company to achieve a high market share (Kumar and Meenakshi, 2010). The brand of Amul ghee has also been a star for the company as the brand has been able to obtain a 30% increase in its sales, while the market share held by the product is around 18%, along with an annual turnover of more than 1,700 crore (Singh, 2016).

Question Marks

The products that have some likelihood of overcoming the challenges and grow the market share in future have been termed as question marks in the BCG matrix. One of the reasons why this category is labelled as question mark is that these products can either become a success in the form of taking the position of a star, or become a source of continued loss for the company. The industry has growth potential, thus making it possible for the products to have room for growth if the pertinent issues are effectively managed. However, ineffective management of these issues can make it difficult to expand the market share of the product. There are some products being managed by Amul that can be identified as a question mark as their potential as a source of profitability remains uncertain. Amul lassi has been marketed with the aim to increase the market share and compete with the other beverages available to the market. There has been some success as observed from the increase in sales, however the company needs to make further investment to strengthen the product. Likewise, the packaged milk that is depicted as the UHT treated and processed milk has experienced some increase in sales of up to 53 percent (Rupera, 2013), but there continues to be the need for further growth of these products to be classified as stars. The increasing population and demand for healthy milk poses a growth opportunity for the business in the long run.

Dogs

Dogs are those products that have low market share and at the same time have limited likelihood of growing into a profitable business unit for an organization. The low chances of success suggests that the management needs to be careful with the decision of investing resources in such a product since it offers no significant benefit to the organization. These products can be regarded as cash traps due to the low chances of becoming a significant source of profitability for the company. Investment in these businesses is not likely to yield much profits, therefore they are not seen as a useful source of earning. Amul has few products which have not been able to generate the expected sales and revenues. One of the notable examples in this regard is Amul chocolate, which has experienced a demand of 3500 tons of chocolate in 2016 (Franchise India Bureau, 2016). This situation indicates some development in the business position of the chocolate brand, but the competitors make it difficult to increase the market share to a significant degree that could make this product become a source of sustainable revenues. The modified strategy of managing the chocolate brand is expected to bring an increase in the market share of the product in the coming years, which suggests that the chocolate brand can become a star if profitability targets are achieved. Another product that is underperforming for the company is Amul pizza, which has achieved a sales of 5,000 pieces per day. The company has invested in expanding the business unit with the aim to increase the daily sales. However, if the sales figures do not increase, a probable course of action would be divestment of the pizza brand.

References

Franchise India Bureau, 2016. Amul to augment its chocolate business by increasing its production capacity. Franchise India, [online] July 28. Available at: <http://news.franchiseindia.com/restaurant/Amul-to-augment-its-chocolate-business-by-increasing-its-production-capacity.n13429> [Accessed 16 September 2016].
Kumar, A. and Meenakshi, N., 2010. Marketing Management. India: Vikas Publishing House.
Rupera, P., 2013. Amul sees 53% growth in Ultra-High Temperature milk in Tetra Pak. Times of India, [online] September 10. Available at: <http://timesofindia.indiatimes.com/business/india-business/Amul-sees-53-growth-in-Ultra-High-Temperature-milk-in-Tetra-Pak/articleshow/22460569.cms> [Accessed 15 September 2016].
Shashidhar, A. 2016. The Rs 80,000 crore milk business. Business today, [online] June 5. Available at: <http://www.businesstoday.in/magazine/cover-story/indian-dairy-market-is-on-a-tear-due-to-new-players/story/232545.html> [Accessed 15 September 2016]
Singh, N. 2016. FMCGs taste ghee success as Patanjali spreads awareness. Times of India, [online] April 19. Available at: <http://timesofindia.indiatimes.com/business/india-business/FMCGs-taste-ghee-success-as-Patanjali-spreads-awareness/articleshow/51886560.cms> [Accessed 15 September 2016]