amul magnetic marketing
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A
Project Report
On
The Magnetic Marketing of
Amul
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CONTENTS
DECLARATION1
INTRODUCTION.2
AMUL THE ORIGIN..3
COMPANY PROFILE .4
KEY FEATURES OF AMUL6
PRODUCT THE SOUL OF AMUL...7
PRODUCTS AT A GLANCE.8
PLACE..
DISTRIBUTION NETWORK
THE NETWORK AT A GLANCE
SELECTION, MOTIVATION & EVALUATION
OF CHANNEL MEMBERS..
THE e-EXPERIENCE OF AMUL
CONCLUSION.
BIBLIOGRAPHY
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INTRODUCTION
India is the largest milk producing country in the world after US. In 1997, totalmilk production in the country was 72 million tonnes, accounting for 13% of the
worlds total milk production.During the last three decades, the progress made by the country in increasing milk
production is remarkable. Annual milk production in India has made a quantumjump from 22 million tonnes in 1970 to 74 million tonnes in 199899.
The Operation Flood launched in 1970 under Dr Verghese Kurien was successfulin modernizing the dairy sector in India and creating a strong network for
procuring, processing and distribution of milk through the co-operative sector.Operation Flood also organized dairy co-operatives in milk shed areas of villagesand links them to metros - the major market for milk .First dairy co-operative -
National Diary Development Board (NDDB), at Anand, Gujarat.
Amul's success led to the creation of similar structures of milk producers in otherdistricts of Gujarat. They drew on Amul's experience in project planning andexecution. Thus the 'Anand Pattern' was followed not just in Kaira district but inMehsana, Sabarkantha, Banaskantha, Baroda and Surat districts also.
Major milk procuring centres in India are: Anand (Gujarat), Mumbai(Maharashtra) , Chennai, Erode, Salem (Tamilnadu), Bangalore (Karnataka), NewDelhi, Hyderabad (Andhra Pradesh).
The milk market at a glance
Today in India the liquid milk production is 74 million MT / year and themilk production growing at around 5 % CAGR.
In India around 9 MT is pasteurized & packed while the rest is sold loose. The demand from metros for packaged milk - around 6 million MT which is
a potential market.
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Per capita milk consumption in India has grown from 132 gms / day to 233gms per day in 1997-98.
COMPANY PROFILE
The story of Amul inspired the 'Operation Flood' and heralded the 'WhiteRevolution' in India. It began with two village cooperatives and 250 liters of milk
per day, nothing but a trickle compared to the flood it has become today.
Amul (Anand Milk Union Limited), formed in 1946, is a dairy cooperative
movement in India. It is a brand name managed by an apex cooperative
organization, Gujarat Co-operative Milk Marketing Federation Ltd.
(GCMMF), which today is jointly owned by some 2.6 million milk producers in
Gujarat, India.
AMUL is based in Anand, Gujarat and has been a sterling example of a co-
operative organization's success in the long term. It is one of the best examples of
co-operative achievement in the developing economy. "Anyone who has seen ...the dairy cooperatives in the state of Gujarat, especially the highly successful one
known as AMUL, will naturally wonder what combination of influences and
incentives is needed to multiply such a model a thousand times over in developing
regions everywhere. The Amul Pattern has established itself as a uniquely
appropriate model for rural development. Amul has spurred the White Revolution
of India, which has made India the largest producer of milk and milk products
in the world. It is also the world's biggest vegetarian cheese brand.
Amul is the largest food brand in India and world'sLargest Pouched MilkBrand with an annual turnover of US $1050 million (2006-07). Currently Amul
has 2.6 million producer members with milk collection average of 10.16 million
liters per day. Besides India, Amul has entered overseas markets such as
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Mauritius, UAE, USA, Bangladesh, Australia, China, Singapore, Hong Kong and a
few South African countries. Its bid to enter Japanese market in 1994 had not
succeeded, but now it has fresh plans of flooding the Japanese markets .Otherpotential markets being considered include Sri Lanka.
Dr Verghese Kurien, former chairman of the GCMMF, is recognized as the man
behind the success of Amul. On 10 Aug 2006 Parthi Bhatol, chairman of the
Banaskantha Union, was elected chairman of GCMMF.
AMUL AT A GLANCE
Member 13 district cooperative milk
producers' Union
No. of Producer Members 2.79 million
No. of Village Societies 13,328
Total Milk handling capacity 11.22 million litres per day
Milk collection (Total - 2008-09) 3.05 billion litres
Milk collection (Daily Average
2008-09)
8.4 million litres
Milk Drying Capacity 626 Mts. per day
Cattle feed manufacturing
Capacity
3500 Mts per day
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TYPE Cooperative
ESTABLISHED 1946
NAME Anand, India
HEADED BYChairman, Gujarat Co-operative Milk
Marketing Federation Ltd. (GCMMF)
PRODUCTS Dairy
REVENUE $1.33 billion USD (in 2007-08)
SUPPLIERS 2.79 million milk producers
WEBSITE www.amul.com
GCMMF TODAY
GCMMF is India's largest food products marketing organisation. It is a state
level apex body of milk cooperatives in Gujarat, which aims to provide
remunerative returns to the farmers and also serve the interest of consumers
by providing quality products, which are good value for money. GCMMF
markets and manages the Amul brand. From mid-1990's Amul has entered
areas not related directly to its core business. Its entry into ice cream was
regarded as successful due to the large market share it was able to capture
within a short period of time - primarily due to the price differential and the
brand name. It also entered the Pizza business, where the base and the recipes
were made available to restaurant owners who could price it as low as 30
rupees per pizza when the other players were charging upwards of 100
rupees.
In September 2007, Amul emerged as the leading Indian brand according to a
survey by Synovate to find out Asia's top 1000 Brands
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Despite of the economic slowdown Amul has managed to maintain its profitfigures. The sales turn over Amul for the year 2008-09 is Rs.67113 million.
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AMULS TARGET MARKET
Wide range of product categories caters to consumers across all
market segments. For example, Amul kool is targeted at
children, while teenagers prefer Kool Caf, as it has a coolimagery associated with it.
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KEY FEATURES OF AMUL
A mass market player
No premium offerings
Product level- movedfrom core benefit to expected benefit.
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Product type - consumable and perishable products
USP- Quality and affordability
Up against major players value addition to customers
Strength- Sheer size and scale of operation
First entry first mover advantage
Continuous New offerings for health conscious and vibrant India.
PRODUCT THE SOUL OF AMUL
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PRODUCT CLASIFFICATION
DURABILITY AND
TANGIBILITY
CONSUMER GOODS
TYPE
INDUSTRIAL GOODS
TYPE
NON DURABLE
GOODS(Amul)
CONVENIENCE GOODS MATERIAL AND PART
(RAW MATERIALS)
STAPLES
(Amul)
FARM PRODU
(Amul)
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AMUL means "priceless" in Sanskrit. The brand name "Amul," from the Sanskrit
"Amoolya," was suggested by a quality control expert in Anand. Variants, all
meaning "priceless", are found in several Indian languages. Amul products have
been in use in millions of homes since 1946.
The product mix of a company, which is generally defined as the total composite
of products offered by a particular organization, consists of both product lines and
individual products. In this case forE.g. Bread spreads, milk drinks, cheese,
powder milk etc.
A product line is a group of products within the product mix that are closelyrelated, either because they function in a similar manner, are sold to the same
customer groups, are marketed through the same types of outlets, or fall within
given price ranges. Here ForE.g. Powder milk, Fresh milk, health drinks etc.
A product is a distinct unit within the product line that is distinguishable by size,
price, appearance, or some other attribute. E.g. Amul lassee, amul lite.
Like any other product Amuls product mix also has a certain width, length, depth
and consistency. These are summarized in the table next page.
The width of a product mix refers to how many different product lines Amul
carries, which are nine in no. as shown in table.
The length of a product mix refers to the total no. of items in the mix. Here
in the table it is 48.
TheDepth of a product mix refers to how many variants are offered of each
product in the line. Like here Amul Pure Ghee comes in two variants with
three diff. pack. Sizes, then it has depth of six.
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The Consistency of the product mix refers to how closely related the various
product lines are in end use, product lines, or some other way. Here Amuls
product lines are consistent insofar as they are consumer goods goingthrough same distribution channel.
PRODUCT-MIX WIDTH
Bread
Spreads
Milk
Drinks
Powder
Milk
Fresh
Milk
Cheese Desserts Pasteurized
Milk
Health
Drink
For
Cooking
AmulButter
Amul KoolMillk
Shaake
AmulyaDairy
Whitener
AmulFresh
Milk
AmulPasteurise
d
Processed
Cheese
Amul IceCreams
Toned Nutramul Amul /Sagar Pur
Ghee
Amul Lite Amul Kool Sagar Tea
Coffee
Whitener
Amul
Gold
Milk
Amul
Emmental
Cheese
Amul
Mithaee
Gulab
Jamuns
Double toned Amul
Shakti
Health
Food
Drink
Amul Mala
Paneer
Delicious
TableMargarine
Amul Kool
Cafe
Sagar
SkimmedMilk
Powder
Amul
TaazaDouble
Toned
Milk
Amul Pizza
MozzarellaCheese
Pure Khoya
GulabJamums
Full cream Mithai
Mate
Kool Koko Amul
Instant
Full
Cream
Milk
Powder
Amul
Lite
Slim
and
Trim
Milk
Gouda
Cheese
Amul
Chocolates
Probiotic milk Sweetene
Condense
Milk
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Nutramul
Energy
Drink
Amul KoolChocolate
Milk
Amul
Spray
Infant Milk
Food
Amul
Fresh
Cream
Amul
Cheese
Spreads
Amul
Lassee
Flavored milk Masti Dah
PRODUCT PORTFOLIO
CATEGORY MARKET
SHARE
MARKET
POSITION
Butter , Ghee 85% 1
Milk Powder 40% 1
Cheese 50% 1
Ice cream 24.75% 2
Sweets 50% 1
Chocolate Drink 90% 1
Chocolate 10% 3
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PLACE
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Amul has effectively managed flow of its products. It has always focused on easy
consumer accessibility. The products are available in small shops as well as in
large retail outlets also.
Amul has recently entered into direct retailing through "Amul Utterly Delicious"
parlours created in major cities Ahmedabad, Bangalore, Baroda, Delhi, Mumbai,
Hyderabad and Surat. Amul has plans to create a large chain of such outlets to be
managed by franchisees throughout the country. Amul Parlours were created at
some prominent locations in the country, which are run by the company or its
wholesale dealers.
1. Delhi Metro Rail Corporation
2. The Somnath Temple
3. National Institute of Design
4. Infosys Technologies in Bangalore, Mysore & Pune
5. Wipro campus in Bangalore
6. L.J. College, Ahmedabad
7. Ahmedabad Airport
8. Surat Municipal Corporation
9. Delhi Police
10.Gujarat State Raod Transport Corporation11.Jubilee Mission Medical College, Trichur, Kerala
12.Sanjay Gandhi Hospital Parlour, Amethi
13.Indian Institute of Management, Kolkata
14.Cafe Amul, MDG, Gandhinagar
"Amul Utterly Delicious" parlours are an excellent business opportunity for
investors, shopkeepers and organizations. In order to come closer to the customer,
we have decided to create a model for retail outlets, which would be known as
"Amul Preferred Outlets"(APO).
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DISTRIBUTION NETWORK
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THE CHANNEL NETWORK
First Leg (From Manufacturing Unit)
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GCMMF
GCMMF
Depot.. Depot..
WD1 WDn
Retail..Retail1
Third leg
Second leg
Manufacturing
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Procurement ChannelDistribution
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GCMMF
Head Office
MU1 MU...n
VCS1 VCSn
Village Village
Upstream flow
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SCM AND MARKET LOGISTICS
THE NETWORK AT A GLANCE
Milk is procured from the villages and collected at Village Cooperative Societies
(VCS), from there the milk is taken to manufacturing units where the milk is
processed into various products.
The products are then transporters to the company Depots located in various parts
of the country. The products are then sent to Wholesale Distributors (WD) and
from there to the retailers.
THE FACT SHEET Milk is procured twice a day from 2 million from Gujarat alone
The payment is made under twelve hours of procurement
There are 10000 village cooperative societies There are 3600 wholesale distributors in the country
45 depots
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The C&F agents are not fixed and are decided by the local company
offices
There are approximately 4,50,000 retailers spread all over India
Total house hold consumers covered are 100,000
The milk procured per day is 5 million liters
Where the total capacity of operation is 7 million liters per day
The peak processing till date has been 6 million liters per day
These co operative societies are bound to supply there produce only to
GCMMF
CHANNELS
Upstream Channel: In which milk is procured from the farmers to the
manufacturing units.
1. In the first step, the milk is taken to the VCS by the farmers on foot orbicycles in small quantities
2. The second step involves the transportation of milk from the co-operatives to the manufacturing units this is done in special truckswhich are equipped with tankers to carry milk.
Downstream Channel: It is the distribution part of the supply chain from the
manufacturing units to the retailers.
1. First legFirst leg of transport is from the manufacturing unit to the companydepots. This is done using 9 and 18 MT trucks any lesser quantitywill be uneconomical to the company there fore is some time the
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quantity ordered is lesser then club loading is done which means thatthe product ordered is supplied with some other products.
a. Frozen food the temperature of these trucks is kept below-18C
b. Dairy wet the temperature of these trucks is kept between0-4C
2. Second legIt is from the depot to the WDs, this transport is carried out ininsulated 3 and 5 MT TATA 407s here a permanent dispatch plan
(PDP) is prepared where the distributor plans out the quantity ofvarious products to be ordered on a particular date.
3. Third legThis is the flow of good from WDs to retailers, a beat plan is
prepared and transportation is done on auto-rickshaws, rickshaws andbicycles.
SELECTION, MOTIVATION &EVALUATION OF CHANNEL MEMBERS
Selection:
The company takes into consideration a host of factors while selecting the channel
members. This is because GCMMF believes that selection of channel members is a
long run decision & the rest of the decision regarding the supply chain dependsupon the efficiency & coverage by the channel members. The following are the
host of factors considered by the company in selecting the channel members:
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Authentication is required by the regarding the identity of the channelmembers, which includes the name & address, photograph of the location.
Proof of solvency which requires name & address of the channel membersbankers
Safety of the inventory, which means that the distributor/ dealer should get thestock of the company insured.
Inventory or the perishable goods kept by the distributor/ dealer should be in
good condition which means a detail of storage space & Refrigeration facility isto be provided. Refrigeration system should have deep freezers, cold room &walk in coolers.
Details of the delivery vehicle, which includes Light Commercial Vehicles,Matador, 3 Wheeler Van, Tricycle Van & Hand/Push cart. The number &model of each of the vehicle needs to be furnished to the company.
GCMMF acknowledges the fact that it needs to be sensitive to the marketdemands. For this it requires that a number of salesmen needs to be present onthe field. The salesmen too are divided into various categories like the Fieldsalesmen & Counter salesmen. Also the details of Clerical Staff & Mazdoorsare to be provided. The technical competence of the salesmen needs to bementioned
Details of the product kept of other companies have to be provided. The annualsales of these products too have to be mentioned. Also details of
complementary products & product lines need to be mentioned.
Dealers of the company must carry a good reputation. This is due to the factthat the company believes reputation of the dealer affects the clientele.
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Market coverage by the distributors needs to be defined which includes detailsof Geographic coverage & Outlets per market area.
The company also requires the dealers to furnish any Advertising & Salesinitiative undertaken by them on behalf of the company.
Motivation of Channel Members
GCMMF strongly believes in maintaining a good relationship with the channel
members so that they are genuinely motivated to work for the company. Also if the
channel members are motivated, they can also initiate advertising & sales
promotion schemes on behalf of the company. However to keep the channel
members motivated to work, the company has to incur certain costs but the
benefits of it are felt in the long run. The following are the motivation programs
run by the company:
Distributors
One of the main factors, which keep the distributors motivated, is the margin.Usually the margins offered by the company are 8% & it is raised to 8.5%.Volume wise this comes out to be a big figure since Amuls product has a gooddemand in the market. However compared to the other companies the margins
are still lower since the new players in the market offer a much higher margin.But the very fact that Amuls products have good demand in the marketmotivates the distributors to stock it.
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Amul being a cooperative cannot afford to give heavy monetary incentives.Amuls products are considered to be value for money since the company does
not believe in charging high margins. In fact all monetary incentives are just theshort run means to promote the companys product. In order to keep theChannel members motivated in the long run, Amul builds on the concept ofTrade Marketing which makes the dealers & the distributors believe that thecompanys products are worthy of being pushed in the market.
The company is organizing various Total Quality Management initiatives &workshops. Here various counseling measures are undertaken by the companyto improve the overall working of the distribution network.
Vision and mission statement: the company cascades down the vision to thevarious channel members, this is done through various events organized by thecompany at different locations where the values of the company are made clearand enforced to the channel members.
Amul yatras: this includes taking the channel members on a guided tour of themanufacturing and procuring facilities in Gujarat. So that the channel memberscan have an experience of the working of the company and can pick up somequality measures that can help them to synchronize and improve their own
functioning at various levels. This in turn help the company to co ordinate theentire value chain, as the channel members understand the various constraintsand liberties the company goes through. The company has already got theRajiv Gandhi award for quality.
Retailers
Trade schemes: these are undertaken by the company only for the hard sellingitems e.g. Ice creams, flavored milk etc. for these the company raises themargins by 2%, also schemes like good packaging incase of butter and cheeseis undertaken by the company. However this is only a short-term initiative to
push the products of the company.
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Glow boards: the company puts up glow boards at the retailer and pays the
major portion of the cost.
Schedule of the salesmen: they provide the retails with this schedule so theretailers can pre estimate the quantities of the various products needed.
Infrastructure facilitation: the company facilitates the retailers to buy freezersand fridges by formulating an easy payment program and a commitment to buy
back the equipment at a reasonable price when the value of the equipment hasdepreciated.
Evaluation of channel members Beat plan: this plan is generated for the various product categories i.e. diary
dry, diary wet, Dhara and ice cream. A weekly schedule is prepared forvarious markets and the retailers the turnover for each of the product iscalculated for the wholesale dealers.
Cumulative performance: the performance of the dealers is averaged outover a period of three years where a comparison is made of the presentperformance vis--vis the previous ones.
Target versus achievement: the performance and the targets are comparedand therefore the gaps are identified which help in evaluating the WD and
planning for the next year as well. This is done for each of the productcategory.
THE e-EXPERIENCE OF AMUL
Enterprise resource planning
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The company at has implemented an ERP program as low as Rs. 3 corers incollaboration with TCS ltd. The company uses it, the data right from the
procurement from the farmers till the delivery of goods to the retailers is fed intothe system. The software enabling the channel members to use for thesynchronized working and best possible utilization of the available resourcesmaintains details regarding the inventory management. Market logistics dealswith the implementation of the SCM of the company.
The scale of operations of Amul is very large and complex because of the huge
supplier base the Gujarat Village cooperative society members. Amul makes about
10 millions payment daily amounting to transactions worth Rs.170 million in
cash. More than 500 trucks move the milk from villages to 200 dairy processing
plants twice a day. The IT initiatives of Amul started in 1994 IT became the major
thrust area of GCMMF as it can facilitate improvements in operational efficiency.
Since then GCMMF is marching in a big way starting from AMCUS to todays
DISK.
ROAD AHEAD FOR AMUL
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http://images.google.co.in/imgres?imgurl=http://www.unapcict.org/ecohub/case-studies/anand-milk-collection-centres-anand-gujarat/photo1_small&imgrefurl=http://www.unapcict.org/ecohub/case-studies/anand-milk-collection-centres-anand-gujarat&usg=__ZnmSFOjbmQkQq56Xh2P0mp0jnv8=&h=187&w=250&sz=18&hl=en&start=2&um=1&tbnid=hJ5T4pgSOZh39M:&tbnh=83&tbnw=111&prev=/images?q=milk+collection+centers+at+amul&hl=en&um=1 -
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To improve further Amul can try out following ideas:
Amul can venture out on new products like toned milk, condensed milk that
can be used for sweets, baby products.
There are certain products like amul basundi, gulaab jamun, chocolates etc
which are not as popular as ice creams. Amul must try to understand the
cause of this through thorough market research and work on improving
these products.
Though amuls hoardings are a huge success, it can penetrate even better inthe rural areas by advertising through the media via cable channels and
newspapers. Sponsoring shows in TV, sports events can be of great help.
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CONCLUSION
Amul may justifiably take pride in having built the largest food product business in
the country; they do not pause to rest upon our laurels. In this environment, Amul
has survived and grown on the basis of its greatest strength: co-operative culture,
co-operative networking, market acumen and respect for both producer and
the consumeThus the magnificentmarketing mix of Amul has strengthened its
hold in the market beyond comparision.It is indeed magnetic as it has attracted &
retained customers, suppliers, emlopyees, stake holders for years long.
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EXIHIBIT
Figure 1- MILK OUTPUT IN INDIA
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BIBILIOG RAPHY
Books:
Marketing Managementby Kotler, Keller, Koshy, jha.
(13th edition- Reprint 2003)
Published by- Prentice Hall Publishers(P) LTD
Marketing Managementby Philip Kotler
Published by- Tata McGraw-Hill Publishing Company Limited,New
Delhi.
Web sources:
www.amul.tv
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www.amul.com
business .outlook india .com
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http://www.amul.com/http://www.businessoutlook.com/http://www.amul.com/http://www.businessoutlook.com/ -
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Thank You