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Rise of Patanjali and its impact on the Indian market

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ABSTRACT

This case is intended to illustrate the marketing tactics introduced in the fast-moving consumer goods (FMCG) sector by a new entrant. As demonstrated by the experts, the significance of brand architecture in building brand relevance in this competitive environment and improving consumer loyalty was highlighted. All the major players in the sector have envied the brand to prove itself as the biggest disruptor in terms of its voluminous sales and ever-increasing revenues.

This Patanjali case provides an insight into the tactics adopted by a young company to place the brand at the right time and gain a significant market share. It also highlights the fact that exceptional competition in distribution strategies may not be the only deciding factor in the successful management of distribution strategies, and it is important to correctly sort out the path ahead.

INTRODUCTION

In a growing country like India with primarily dynamic consumer markets are driven by cut-throat competition and consumer being impair for choice, the name “Patanjali” is synonymous with the concept of “Ayurveda” taking the retail jump. The supporter of this prevalent desi brand, Patanjali, is Baba Ramdev, who has been given a status not less than that of a celebrity. As the world is moving toward using more “Aayurveda” product. Patanjali is big advertising company who is investing more money on advertising and in a manner to show its all product is herbal. The new strategy adopted by this company was never used by the company like Dabur, Himalaya, etc. who also produce herbal product.

Now Patanjali industry is growing very fast across the world making its product reach at a large audience. Patanjali understood the market behaviour and started to produce the product which is most similar to the existing product. As like Patanjali product Dant-Kanti similar to other brand tooth paste, Power-vita similar to Horlicks, Honey, Chawanprash etc. which is becoming more famous than its alternative. It has also used capped price lower than its alternative which helped it to reach at large public. Patanjali adopted a unique way of marketing that it opened its own shop for retailing. 

So, what is the secret formula behind Patanjali’s dramatic rise? What explains this trajectory of remarkable growth? How did a combination of ancient Indian Ayurveda science and modern technology make its mark and offer a run for their money to leading names when many Indian brands had struggled in the past?

Keywords

Patanjali Ayurveda Limited (PAL), Fast-Moving Consumer Goods (FMCG)

Patanjali Ayurveda Limited

PAL, an Indian FMCG company, is a business miracle of sorts with a mission to make India an ideal place for the growth and development of Ayurveda and anything natural for the rest of the world. It was started by Baba Ramdev and Acharya Balkrishna as a small pharmacy in Haridwar in 1997. In 2006, PAL was established as a private limited company and subsequently converted into a public limited company in 2007, with an objective of establishing the science of Ayurveda in accordance and coordination with the latest technology and ancient wisdom. It is a registered company under the Company’s Act, 1956, having its registered office in New Delhi and its headquarters and manufacturing units located in Haridwar, Uttarakhand.

The idea behind the birth of PAL was to “link the rising destiny of millions of rural masses on the one hand and many more suffering and leading unhealthy urban life style on the other” indicating that the company was determined to manufacture products that benefit mankind, which in the process was acknowledged by the consumers globally making it a leading manufacturer of Indian-made consumer goods. Every day, some 300 trucks roll out of a 150-acre manufacturing complex on the outskirts of Haridwar, one of India’s holiest cities. This is the biggest plant of PAL, which supplies roughly 60 percent of its output which includes a huge number of cartons of juices and herbal candies, toothpastes and soaps, flour and spices, and an assortment of herbal medicines which are very popular within the country as well as across the borders in curing apparently all types of illnesses like headaches, arthritis, asthma, and high LDL cholesterol.

ANALYSIS

Control in Market

  • “Trust and faith continue to form an engaging proposition in India than science and logic, which made it easier for Baba Ramdev to take the opprtunity with the slogan “Prakriti ka Ashirwad”. This young brand with a focus on “Swadeshi” positioning and underlining their product with phrases “natural and pure” went past the most established brand. The “Satvic” brand endorser foretells that PAL will overtake the established decades-old brands like Nestle and Proctor & Gamble by doubling its revenues to 1.5 billion USD and will slowly inch its way toward the second position next only to Unilever in India.
  • PAL embodies all natural products which are synonymous with Ayurveda and Indian values and has a wide variety of products in the much sought after categories like food, cosmetics, and ayurvedic medicinal preparations.
  • For any company advertising and promotion typically account for 20-30 percent revenue expenditure, but this was significantly taken care by Baba Ramdev brand strategy.
  • During the initial stage PAL followed a unique word-of-mouth publicity model, and the brand loyalty of its customer proved successfully for the company which eventually helped them to save on marketing and advertising cost as well. He grasped every opportunity available to engage customers who were more concerned with healthy living and created an empire comparable to some of India’s prominent mid-size FMCG companies that took Patanjali close to the ranks of FMCG companies such as Emami and Marico in the process.

Fighting the Odds

  • Baba Ramdev felt the temperament of Indian consumers towards price sensitivity and their penchant for culturally rooted goods. To this end, he built a unique PAL model that embraced unique branding and affordable pricing characteristics that formed his end-to-end market strategy.
  • The Ayurveda division of Patanjali is the star performer with products like Desi Ghee, Patanjali Honey, Dant Kanti, Shampoo, shop, being the star performer of all the products. Patanjali Ghee is the largest selling product of the company. It most of the product dominate the market by a large share of market like 15% shampoo, 14% toothpaste, 15% face-wash, 35% dish wash, and approx. 50% honey.
  • The marketing of PAL is very unique as it promise the customer of delivering a product with the use of authentic and natural ingredients in appropriate amount. And the result is that customer believed in authenticity and goodness of the product.
  • Patanjali’s flagship products, such as honey, toothpaste, and noodles, to name a few, have already forced rivals to lower their prices in order to save their market presence.
  • Baba Ramdev has a well-established business relations with Nepal, which is home to the manufacturing plant of PAL and a supplying hub for its herbs that it imports from Nepal’s Himalayas. Compared to their competitor brands, PAL products are available at an attractive discount because they directly supply products from farmers and cut middlemen to boost profits, thereby deriving a cost advantage and carrying it on to consumers at a lower price. Currently, PAL is making approx. 20% operating profit which is higher than the industry average.

Distribution Strategy

  • Patanjali initially drives trials and consumption using dedicated stores in a new market. Basically, these stores are Ayurveda clinics, run entirely by entrepreneurs with their own investment. They are of three types – Arogya Kendra, Chikitsalaya and Swadeshi Kendras. Once a large consumer base is built through these specified stores, these customer will expect Patanjali’s products to be available at general stores, grocers and chemist in the vicinity of the dedicated store. These retailers are then forced to stock pile Patanjali’s products for fear of losing out on a customer’s gratitude. It provides a forum for the next stage of growth. Delhi NCR is PAL’s biggest market but Mumbai has strong dedicated market.
  • As market trials and consumer pulls are developed, it is increasingly apparent that general trade supply will increase. Higher incidences of placards outside numerous outlets advertising that ‘Patanjali items are available here’ bear witness to the same.

Baba as Brand Ambassador

  • The other big factor in development of Patanjali is the image of Baba Ramdev as celebrity. He is recognised face all over India and beyond as a Yoga Guru. Ramdev Baba has also a large digital presence with 2.3 million follower on twitter, 7.6 million subscriber on youtube and also with large following list on facebook. So PAL is able to create a brand perception of health and wellness among the Indian masses, primarily because of Ramdev’s association with the brand.
  • Baba Ramdev used to organise yoga session to create awareness among people and then to generate interest and desire to purchase the product among the consumers. PAL uses word-of-mouth publicity, above-the-line tactics such as television, web platforms, magazines, and newspapers, and a reality worth noting is that by communicating well with politicians and retaining good ties with the press and media, Baba Ramdev advertises his business free of cost. Aastha TV channel which owned by Acharya Balkrishna is a platform where Ramdev Baba used to come on daily basis so it all helped in building a confidence in brand and marketing.

Product experimentation and innovation

Patanjali began at a time when FMCG goods by major multinational corporations were already doing well and enjoying consumer loyalty. Despite the muffled consumer demand and a broad range of existing products and players, Patanjali products were able to differentiate itself in the backdrop of never seen before combination of Ayurveda and technology. It came with a unique method and presented the Ayurveda in advanced form as never seen before. Initially Ayurvedic brand like Dabur, Baidyanath, etc. use to produce the product in the form of churna and chatni but this perception or form was changed by PAL. So it got accepted in both rural as well as urban space.

Single Brand Strategy

  • Patanjali used a method called single brand strategy which means every product of this company will be under the same brand name. As we can see P&G is a large company which have a large no of products but every product has different name. Same with Coca-Cola, Nestle and many other which used different brand strategy under a name only. But PAL used this single brand strategy which helped it as if some product become famous then its other product will also go in hand without mush advertising.
  • This tactics also used by Google as Gpay, Gmeet, Gmap etc. This tactics may be disastrous if any product fail and largely avoided by the consumer. But PAL is standing firm in the market with flying wing.

Swadeshi Factor

In view of its widely-known Swadeshi movement, Patanjali products are advertised as historically and culturally indigenous. By projecting itself as a brand that is extremely Indian, the business has captured the Indian consumer’s interest. At a time when every Indian was shifting their mind from multi-national company to home grown products, PAL fill that gap and being termed as Swadeshi means being grown and developed in India only. It also advertises its products as being all-natural void of synthetic and artificial ingredients. One cannot deny the fact that Indian market still has a penchant for culturally rooted products.

Hiring the right talent

Building a company involves recruiting people who know their stuff in and out with the right skill sets. Patanjali does not employ MBAs from trendy universities, but hard core practitioners with suitable credentials, such as Masters in Chemistry, Ayurveda, with a penchant for those with research experience. Patanjali also opened its own school for children to educate them science with the help of its own culture. “Ours is not a corporate culture–it is a spiritual culture and it is purpose-driven,” says managing director Acharya Balkrishna.

Effect on Market

  • The existing FMCG companies directly affected by entrance of PAL such as HUL, Dabur, Emami and Himalya have improved their formulations by expanding their portfolios of herbal products and making their products more relevant to customers. The brands like Colgate and Dabur presence was mitigating from the market by aggressiveness of Patanjali, and the bigger brands like HUL and Emami used acquisition spree and acquired brands like Indulekha and Kesh King, respectively, while Himalya opted for aggressive marketing strategies. Baba Ramdev made PAL a force to reckon with in the Indian FMCG sector by partnering with “Future Group,” which ushered in a new trend, creating a strong swadeshi cult in the Indian FMCG market which focused on herbal-based soaps, shampoos, and food products, to name a few. This shows that, while a revolutionary brand, Patanjali has only opted for market expansion rather than replacing or serving as a replacement for existing legacy brands. In other words, it produced, or rather streamlined, the market for Ayurvedic goods, which had not received much attention either from customers or from existing brands or from the market before its arrival.
  • The brand endorsements, product promotions, word-of-mouth messaging, and advertising strategies were carried out in a very simple and natural way that people easily accepted, making the company save on their investments in traditional advertising channels. This was adequately supported by an excellent distribution network system.

CONCLUSION

The Indians, be it a retailer or a consumer, are especially sensitive to any change in the markets, and their outlook is generally based on their judgments and opinions which are significantly aligned toward the value proposition the brand offers. In a diverse and competitive landscape like India, increased market share in a growing market is an ideal scenario for any company in any sector and the growth volumes of PAL are laudable as it shares the competition in the market with the top-branded players.

Brand Patanjali was a viable and powerful threat that made its presence felt across categories for all the leading players in the FMCG market. This was one brand that had a solution to each problem. Baba Ramdev developed a business model that was highly disruptive in an increasingly volatile FMCG environment and by all means more imperative.

This “Patanjali” market disruptor brand has been a runaway success because it is sold with a combination of characteristics such as trust and quality and with a price structure that is justifiable with the margins of the retailers and the needs of the customers. Baba Ramdev aggressive brand strategy by convincing consumer and patriotism helped them to grow faster.

Patanjali’s rapid growth, driven by a wide range of product offerings coupled with unconventional marketing tactics, disrupted the entire FMCG sector and in a record time revolutionised the industry. The dizzying growth tale of Patanjali is now the talk of discussions in boardrooms and case studies at management colleges.

REFERENCES

  • “Rise of Patanjali – Marketing Lessons to Learn ~ Group Discussion Ideas.” Group Discussion Ideas, https://www.facebook.com/groupdiscussionideas/, https://www.groupdiscussionideas.com/rise-of-patanjali-marketing-lessons-to-learn/. Accessed 5 Feb. 2021.

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