Amul Ice Cream

Prahalad and Hart approve of Amul’s efforts to market ice cream to the BOP in India. “Amul, a large Indian dairy cooperative, found an instant market in 2001 when it introduced ice cream, a luxury in tropical India, at affordable prices (2 cents per serving). Poor people want to buy their children ice cream every bit as much as middle-class families, but before Amul targeted the poor as consumers, they lacked that option.”31 According to Amul’s website (http://www.amul.com), in 2006, their cheapest ice cream sold for Rs. 5 for a 50-milliliter (1.7 ounces) serving, which is equivalent to $0.34 at PPP. Not too many poor people living on less than $2/day can afford these prices.

Before Amul entered the arena, HUL was the largest firm in the Indian ice cream market. Prahalad and Hart commended HUL for a radical innovation that allowed ice cream to be transported cheaply across the country in nonrefrigerated trucks, and thus reach the BOP market.32 What really happened is that HUL chose to market to the very top of the pyramid and did not expand into the BOP market. In 2002, HUL decided to compete on differentiation and premium price in the market rather than on low price. HUL also began to focus on six mainline cities, where 60 percent of the ice cream market exists, having realized that the returns from serving other less affluent markets were inadequate.33 After this change in strategy toward the very top of the pyramid, HUL made a profit in the ice cream business for the first time ever.

 
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