Brand Observation Portfolio

Patanjali Ayurved Limited: Growth of Swadeshi

Submitted to: Prof Dr. Ravi Shanker

Submitted by:
Mayank Gandhi (Roll No. 15 ) , Section B
Rishabh Gandhi (Roll no. 30 )
Abhishek Gupta (Roll No. 1 )
Ali Osman Ali (Roll No. 2 )
Introduction: A Million Dollar brand is born

Seems like putting a meditating old Baba on the top of your brand name isnt good
enough to guarantee that your brand is herbal. Patanjali has taken this to a new level
with their brand ambassador, a real yoga guru, Baba Ramdev. Patanjali, or as forbes
has labelled it Indias Body Shop, has taken over the markets with a storm posing a
real threat to the existing market leaders like Colgate, Unilever, Nestle, and
GlaxoSmithKline.

It all started in 2002 when Baba Ramdevs mass yoga camps telecasted through the
leading spiritual channels (which were the new trend then) across the country. These
camps, besides being a free yoga classes for the television viewers, built a big brand
for Baba Ramdev and placed him in a positive light as a person you can trust on.
These yoga camps also somehow kindled a new interest in healthy exercises and
Ayur Veda.

What next? Baba was in the limelight as he became a part of many political as well
as non-political (and rather silly) controversies like cure of Cancer, AIDS, and
homosexuality by yoga.
Between all this, patanjali was born in 2006. Or rather, as researchers say, was being
planned from 2003 itself. Patanjali is actually managed by Acharya
Balkrishna (Ramdevs partner since 1995). The products were initially marketed and
promoted during the yoga camps (which has been attended by around 20 crore, or
almost a sixth of the indian population till now). Since the yoga classes were
conducted for free, people were convinced that the Baba was not in it for the money
(this trick always work).

Patanjali Yogpeeth was a set up in Haridwar; a hindu pilgrimage site, Baba wore
saffron, propagated swadeshi psyche, and the main focus was on Yoga and Ayurvedic
medicines. The Patanjali brand was set, years prior to the foundation of the actual
FMCG Company. The key player here was a simple business whose brand identity
and brand image were in line.

Understanding Market and competition

 INDIAN FMCG INDUSTRY

The FMCG OR Fast Moving Consumer Goods industry is the fourth largest
sector of Indian Economy with an estimated market size of around $49 billion
or 2.5% of Indias GDP . FMCG goods, popularly known as consumer
packaged goods, include all consumables (other than groceries/pulses) that
people buy at regular intervals. Most common household items including toilet
soaps, detergents, shampoos, toothpaste, shaving products, shoe polish,
packaged foodstuff, and household accessories and certain electronic goods
belong to this category. The break-up of the sector in terms product categories
is :

The organized FMCG sector of the country has shown a significantly high growth
rate over the years with its size tripling in the past decade. The focus till now,
however, has only been urban FMCG sector. However as the urban market growth
subsides, the focus is now shifting towards rural India which has largely remained
untapped.

Product Portfolio
 Initially, the company focused only on the development of Ayurvedic medicines,
but gradually started manufacturing food items and cosmetics...With around 500
products, many of them in FMCG category, the company has significantly
increased its market share. Many of its product launches have impacted share of
other FMCG companies in that product category. Since its inception in 2006 the
company has made rapid advances in expanding its reach across many segments
and currently operates a plethora of brands. Its many products include.
Major Competitor
The Indian FMCG sector is highly segmented with the presence of some major
players and many minor players. Of the top 100 brands, 62 are owned by
Multinational Corporations, while the rest are owned by Indian Companies. IIFL
states that Patanjalis highest impact will be on Colgate, since it has gained
substantial traction in oral care; next most affected is Dabur, due to multiple
category overlaps. And ITC, Godrej Consumer Products Ltd and Nestle are least
likely to be impacted due to few common categories. The top companies in terms
of revenues in FY 2015-16 are:

Performance Analysis of Patanjali Ayurved

The company aims at providing natural ingredients and herbal
cosmetic solutions to consumers at affordable costs. Clocking
revenues of Rs 5000 Crore in FY 2015-16 , Patanjali has already
established itself as a major player in the FMCG industry.. The
revenue trends for the company for the past few years have been provided below.
Market Share
Patanjali Ayurved has turned out to be the most disruptive force in the Indian
FMCG market...it witnessed a whopping annual growth of 146% in fiscal year
2016 grossing a turnover of $769 million, whereas its peers including ITC, Dabur,
Hindustan Unilever, ColgatePalmolive and Procter & Gamble struggled to get a
growth much less than double digit.
STP Analysis of Patanjali Ayurved
Kotler defines value as sum of all benefits that an organization provides to its
customer less the cost which customer incurs to get those benefits.

Organizations succeed or fail based on the value they provide to their customers.
Patanjali Ayurved has always provided high value to its customer which led to its
remarkable progress in the target market. Let us understand the Value creation and
delivery sequence of PAL.

Segmentation & Targeting: Strategic Marketing

PAL has segmented its market based on

1. Demographic Income, age etc.

2. Psychographic - Health Consciousness, Patriotism

PAL's target segment comprise of health conscious people who prefer value for
money natural products. PAL has products targeted at children (health drinks) and
elderly people (some ayurvedic medicines). Almost all products of PAL are
affordable in nature (at a price 15% - 30% lower than the competition), hence the
income segmentation strategy has worked. Initially the products were targeted at
lower and middle income groups but with the present turnover of close to a billion
dollars (Rs 5000 cr) this fiscal, it is evident that PAL's products have buyers not
only from the lower income and middle income segments but also from health
conscious upper middle and upper income segments. These 2 segments have found
value in PALS's natural and ayurvedic products.
PAL's market targeting strategy is that of Selective Specialization as they cater
to a lot of segments in their market but not the entire market.

Positioning: Patanjali has a two pronged positioning strategy

1. The brand slogan of Patanjali is Prakriti ka Aashirwaad which means

Blessings of Nature. Patanjali is positioned as Natural Products available at
affordable prices.

2. The 2nd positioning plank is that of Swadeshi Make (Made in India).

Both the positioning planks have created wonders for Patanjali. The twin
positioning planks are synergistically integrated with the brand Patanjali as India is
considered to be the birthplace of Ayurved. TheSwadeshimake plank also helps
in assimilating the previous people movements initiated by Baba Ramdev like
Bharat swabhiman and swadeshi andolan with Patanjali Ayurved Ltd.

STP | Patanjali
Ayurved Ltd.
 Tactical Marketing Mix

Product: Patanjali Ayurved has 4 product categories:

a Home care

b Cosmetics and health

c Food and beverages

d Health drink

The company is planning to venture into packaged cow milk, Khadi and animal
feed this year. Patanjali uses natural ingredients and herbs to manufacture its
products. They have state of the art R&D facility, involved in the latest research on
products which can benefit their target market. It has few star products in the
product portfolio. Patanjali's cow ghee was worth Rs 1308 crore in FY 2015-16,
the herbal toothpaste Dant Kanti was worth 425 crores. Shampoo and Hair Oil
under the brand name Kesh Kanti, did a turnover of Rs 325 crores One of the
reasons Patanjali Ayurved has been able to garner market share so rapidly is
because of low lead times between the product concept and product launch.
Patanjalis R & D team has been able to produce good quality products at low cost
in less time The lead time between the product concept of Patanjali Noodles and
the Product launch in the market is close to 4 months.
The Price war
Patanjali Ayurved's products are sold at a price of 15% - 30% lower than that of
competition. Except for Patanjali Cow Ghee, which is sold at a premium in the
market, every other product has a market penetration pricing strategy. The pricing
strategy has helped Patanjali establish itself in the marketplace. Established brands
which did not consider Patanjali as a competition initially, are now forced to sit and
take notice. HUL (Hindustan Unilever Ltd) has reported the slowest growth in
revenue in the last 6 years. Colgate, one of the MNCs worst hit by the growth of
Patanjali, has reported its worst revenue growth since last 4 years. A comparison
off well-known brands of Patanjali Ayurved with competition is shown below:
 Distribution: Patanjali uses multiple distribution channels to cater to the
market. Company has a reach of 0.2 million outlets. PAL has a strong presence in
the market through its 1200 chikitsalayas, 2500 arogya kendras, 7000 open store in
villages and 5600 marketing vehicles. PAL also plans to establish 250 mega stores
in tier 1 & tier 2 cities. PAL also has a tie- up with behemoths of modern retail like
Reliance and Future Group, which carry its product range across all its stores in the
country. It also has tie-ups with Star Bazaar (Tata Group), More (Aditya Birla
Group), Spencer Retail, D-Mart, Apollo Pharmacy etc to increase its reach in urban
India. PAL has embraced the e-commerce mode of retailing products through
patanjali ayurved.net. PAL has a strong presence in the modern retail format, e-
commerce and its own outlets but lacks presence in the traditional retail formats,
which serve close to 90% of Indian retail market.

Promotion: PAL has used different promotion strategies as follows:

e Baba Ramdev through his Yoga Shivirs not only talks about the different Yoga
postures and their benefits in curing the diseases but also about the Patanjali
Ayurved products aiding in a healthy lifestyle and a disease free life. This is one of
the most potent promotion tools used by PAL.

3. Recently, Patanjali Ayurved has seen a spurt in its advertising spent. PAL's
advertisement in print and digital media is readily seen.

4. PAL has also embraced digital marketing and has a well-designed facebook page
and twitter account.

5. Public Relations: Baba Ramdev has excellent Public Relations and Media skills.
He is an often featured personality along with his products in media.

6. Patanjali ayurved has its channel on youtube which features more than 200
videos on Yoga and product information.

7. Baba Ramdev's books and VCDs are not only an excellent information disbursal
tool but also a subtle promotion tool.
The above mentioned strategies have helped Patanjali reach a turnover of close to a
billion dollars. But PAL has set ambitious goals for itself. Is it possible for PAL to
clock a turnover of USD 1.5 billion (Rs 10,000 crore) in the next financial year and
USD 3 billion (Rs 20,000 crore) by the end of FY 2020. The Strategic Planning
process (Kotler et al, 2008) will through more light on how PAL can attain its goal
in the near future.

Environmental Analysis :
An organization's environment comprise of both macro and micro environmental
forces which shape its future course of action. A thorough knowledge of these
environmental forces helps an organization to analyze its strengths and weaknesses
in the present environment context and strategize accordingly. PAL is deeply
impacted by both macro and micro environment forces and it is imperative for it to
understand and then formulate their goals and strategy based on the same. Macro
Environment forces impacting Patanjali Ayurved are as follows:

1. Political: The present political environment is conducive to the growth of

Patanjali Ayurved in the country. Baba Ramdev is friendly to the present
government. He is a big supporter of Shri Narendra Modi, Hon'ble PM of India

a. Stability: The present central government has majority in the parliament. A

stable government augurs well for the organizations like Patanjali who want to
move on a fast growth track by investing heavily in the factors of production and
marketing.

b. Taxation Policy: Governments taxation policies impact on the cost of the input
products and hence impacting on the final price of the products. PAL input costs
increases or decreases based on the taxation policies of the government

c. Government Support: Central Government is promoting Ayurved and Yoga.

Government of India has a separate Ayush Ministry to promote Yoga, Ayurved
and other traditional and complementary medicines.

2. Economic: The following economic factors are impacting Patanjali Ayurved Ltd
and other organizations in its segment:
a. Inflation rate: Moderate inflation rate, an important factor in the mind of
customer to look out for value for money products.

b. Tax Rates and Interest Rates: Higher tax rates and interest rates impact upon the
cost of capital adversely and hence the manufacturing cost increases, making the
products costly in the market.

c. GST: Implementation of Goods and ServicesTax will also help organizations like
PAL .

3. Social:

a Health consciousness: People are becoming more health conscious and there
is an increasing trend to spend on health and awareness programs and
products.

b Rise in life style diseases: Lifestyle diseases like heart attacks, cancer, BP,
Diabetes are on rise in the Indian society. The main cause for this is
chemicals in the food we eat and the products we use apart from the lifestyle
of an individual. People are more inclined towards natural products.

4. Technological:

a Research & Development: Government has created a favorable environment

for R&D in India. Patanjali through Patanjali Yogpeeth Trust at Haridwar is
involved in R&D of ayurvedic and herbal products. Baba Ramdev has
claimed that their R&D has created ayurvedic products which can cure
deadly diseases like cancer.

b) Automation: Automation in drug production helps in mass production of

ayurvedic drugs without losing their effectiveness and efficacy.

c. Better means of communication, resulting in fast information disbursal and

penetration.
 5. Environmental

a The science of ayurved is free of any hazardous chemicals. It has a direct

advantage over allopathic medicines as it has no side effects.

b India is a rich source of certain herbs which may not be available anywhere else in
the world.

c The residues produced in ayurvedic product manufacturing is far less harmful

compared to that of an allopathic manufacturing.

d Ayurvedic products are more environment friendly compared to other chemical

based products.

6. Legal:
a Ayurved is a vast field. There are government acts applicable to Ayurved:
The medicine central council act-1970, the drugs and cosmetics act 1940 and
rules made thereunder, the drugs and magic remedies act 1954 and the rules
Gifts,
made thereunder.
Discounts,

Offers

Chemical free,
Herbal
shampoo,

Value for money

Prevent hair fall,

Patanjali, Yog guru Baba Ramdevs baby, has gained a huge mind and pocket-share
Remove
(lately) with a multitude of new products getting launched (almost) every month.dandruff,
From their controversial Maggi to Shuddhi, a cow urine-based floor cleaning
Shine and silky
Good
hair,fragrance,

Keep
Clean
hair
Gain and
clean
hair strong
&
strength
health
hair
 solution, the company has jumped into various product
Produ
categories.
Patanjalis product offering is as diverse as it can get. It

ct
spans across various product lines with a very low
product mix consistency. Where have you heard
about a company offering household cleaning supplies,
Strate
personal care, human and cattle food, Spices, Ayurvedic
medicines, Yoga CDs, et al

rgy

Product levels
Patanjali - Line Extension

Launch of Noodles into the existing product category

Natural food products with the existing brand
Patanjali is an example of line extension.
This line extension made a big success in the market
giving Nestles maggi a tough competition and acting as
substitute to banned Nestles maggi.
 Branding Strategy
The success of brand lies in the following:

The Branded House : Patanjali is following the branded house strategy and
is launching various products under one brand, i.e., Patanjali Ayurveda.
They dont promote individual products. Instead, they promote the entire
brand which helps them save marketing and advertising costs as well.

A Strong Brand Ambassador :The fact that Baba Ramdev, a yoga guru
himself, promoting the herbal and organic Patanjali products - has proved
that celebrity endorsements work if there is a high connect between the
endorser and the features of the brand. He endorsed on the name of
Swadeshi factor associated with the company. He mainly preached about
the evil effects of using fast food with chemicals and toxics in them.
 Strong Distribution Channels: The products are sold through three types of
medical centres. These include Patanjali Chikitsalayas which are basically
clinics. Then there are Patanjali Arogya Kendras which are health and
wellness centres. They also have non-medicine outlets called Swadeshi
Kendras. The group has 15,000 exclusive outlets across India. They also
distribute through general retail stores. They have also tied up with well-
known retail chains.

Smart pricing: The company sources products directly from farmers and
cuts on middlemen to boost profits. Hence, they are able to reduce their raw
material procurement cost and are able to produce goods at a much cheaper
price

Product Portfolio :The process is simple. Top-selling products across

brands are picked up from the market and then similar products are
developed based on herbal formulations under Patanjali brands. Mostly, they
are replicas of successful products of multinational companies.

Word-Of-Mouth Promotion: During the introduction stage, Patanjali

followed a unique word-of-mouth publicity model and the entire revenue
was without any advertising. It was because of the brand loyalty of its
customers that the word-of-mouth promotion proved so successful for the
company.

Simple Packaging : Patanjali sells its products with a very simple

packaging. With a product like Patanjali, where the message is to promote
Ayurveda and Health, simple packaging can be a very effective way of
promotion and that is why the company is able to do miracles with its simple
yet effective packaging. With a natural look (especially with leaves and
herbs), consumers get a feeling of health and wellness and they are attracted
to buy the product.

Promotion Through Media: Baba Ramdev is considered to be a veteran

guru of yoga across the globe. Promotion through media has worked well for
Patanjali ayurved because of image of Baba Ramdev .
Tracing Advertisement
Patanjali has been disseminating its message through all leading radio stations,
newspapers and television networks, though it's particular about the placement of
its TV spots.
Patanjali became the biggest television advertiser in the first week of August with
the release of the campaign, according to data on the Broadcast Audience Research
Council (BARC) India website. The campaign was telecast 21,923 times during
this period.
With more than 350 products ranging from noodles and biscuits to shampoo and
toothpaste,
Patanjali's success has shocked its rivals into acknowledging it as a serious
contender in the fast-moving consumer goods market, and a scrappy one to boot.
Case of Patanjali Cow Ghee advertisement
Kyuki rasoi me champion bhi bante hai

The advertisement begins showing all Patanjali products and telling

the consumer that Kitchen is not only the place for cooking but its where
the aspirations grow and dreams are built .The narration has entry of sushil
kumar entering in video symbolizing the aspirations and the dreams quote.

No high-end model but a lady in late 70s is shown walking and looking at
the kitchen edibles and stops at PAL cow Ghee and gets impressed with the
essence of Ghee giving an idea to viewers about the purity and essence
similar to a homemade Ghee.

Alongside the Lady, entry of Olymic medalist Sushil Kumar and beating an
opponent is projecting the power and purity of Ghee necessary in diet to
build and grow. The background voice also points to the brain development
necessary for physical strength and ghee helps in same.

At one side Sushil may appeal to young, teen generation giving the image of
Ghee as power and important growing source ,the Old lady with Grand Maa
impression will boost the brand confidence of generation above 40s
 The ad is repeatedly been accompanied with the tag line Champion banne
ki takat and Kyuki rasoi me champion bhi bante hai is certainly
receptive and goes with brand and its associated value of the persons
showed.

Idea of Cow ghee, its benefits and importance in day to day life is very clear
from the advertisement.