Dr. Shampa Nandi, Faculty ISME
Introduction
Baba Ramdev’s Patanjali has grown multifold in last decade and its tremendous success story has placed the brand as a case study in many management schools. Patanjali’s success has created a “halo effect” in the entire Ayurvedic consumer product categories and the market has reached 77% of Indian homes from 69% within last two years. Ayurvedic products have penetrated to 183 million Indian households within the same period. In different parts of the world, words like “organic/natural/ khadi/ ayurveda/herbal” are big hits in consumer market. Baba Ramdev is very optimistic about the growth of the Patanjali’s market and is expecting to reach Rs 20,000 crore in 2018, doubling the current market share of Rs 10,561 crore (as of March, 2017). Question arise here, what makes a company, started in 2006 achieve a metrioric rise in past few years. This article attempts to map the 4 P’s of Marketing with Patanjali’s business model.
Origin of Patanjali
In 1997 Baba Ramdev, the yoga guru has set up a small pharmacy called “Divya Pharmacy” in Haridwar with his close disciple Acharaya Balakrishna; primarily to produce ayurvedic and herbal medicine. Once Baba Ramdev quoted in an interview that for first three initial years, the company used to distribute medicines free and they did not have money even to pay for registration for “Divya Pharmacy”.
Within a short period, these medicines become so popular that the founders scaled up “Divya Pharmacy” and thought of diversifying into other products. Later on, with Baba Ramdev’s soaring popularity, the company was able to arrange substantial amount of funds as well as bank loans. In 2006, “Patanjali Ayurveda Limited (PAL)” was born as a private company to sell products in the health care, hair care, dental care, toiletries, food and some other categories. With a combination of “Swadesi, Yoga and Ayurveda”, very soon the brand was able to gain the trust of Indian consumers. While Baba took initiative to create the market for his products by utilising his well-established image of Yoga guru and Ayurveda, Mr Balakishna focussed more on the product creations. Their partnership worked phenomenally; though lot of other reasons worked, equally well for the success of “Patanjali” brand.
Let us have a close look on the four P’s adopted by Patanjali.
Price
Ramdev has very cautiously promoted “Patanjali” as a brand whose aim was not to make profit. “Profiting from patients are against the basic philosophy of Ayurveda”, stated many times by Ramdev and the profit margins of Patanjali are miniscule”. The company gets the raw products directly from the farmers keeping intermediaries away, which help to keep production cost low. Patanjali also took various other measures to keep the administrative cost low by paying modest salaries. The company is very clear about recruiting people with right skills to make quality products; not hiring MBAs for promotions but research-oriented post graduates in Science. Giving maximum value for money is the key mantra for positioning “Patanjali Products” in a very price sensitive and culturally rooted market like India. The company has consistently promoted its product with the special feature of selling at least 43% cheaper than competitors’ product. For example, Patanjali Honey (500g) jar is available at Rs. 135, whereas the competitor brand Dabur Honey (500g) jar is costing Rs 199.
Smart Positioning & placing at right distribution channel
Rather than positioning its products as another competitive brand in the cluttered FMCG market, Patanjali very smartly analysed the market and found the gap in the market. To create the space in the market, the founder Baba Ramdev took special initiative to make consumers understand about how MNCs are exploiting farmers by not paying them well, cheating consumers with high prices as well as spoiling the health of consumers by selling product made with hazardous chemicals and pesticides. He made consumers aware about how all the profits earned by the MNCs are actually draining our national assets. Consequently, Patanjali entered in the gap by smartly packaged with the flavour of “Patriotism, health and natural”. As a CSR initiative, the company took special steps to guide farmers with technical aid and information and supplying saplings to them in order to help them in increasing the income. This helped the company not only enhance its brand image but also strengthen its authenticity image.
At the beginning, PAL used three kinds of stores for distribution- Patanjali Chikitsalayas, Patanjali Arogya Kendras (health and wellness centers) and non-medicine outlets called Swadeshi Kendras. Consultation facilities are provided at those chikitsalayas and the company provides training to the medical practitioners. Once the company gained popularity with “word of mouth” promotion and Patanjali’s products are adopted at a large scale, PAL started selling through various well-established retails like Big Bazaar, Reliance Retail, Hypercity, Star Bazaar, D-Mart, Apollo Pharmacy etc. With the passage of time, Patanjali even tied up with e-tailers like Amazon and Big Basket. Baba Ramdev is tech savvy; he regularly uses twitter and Facebook to connect with his customers. Presently, around 9.3 million people follow his Facebook page. Currently Patanjali’s retail reach stands at nearly 0.8 million stores, apart from some 10,000 branded outlets. At every nook and corner of the country, Patanjali has been able to set up a distributor outlet.
Quality Products with clear targets
Patanjali launched its products with a combined message of “Swadesi, low price, natural and pure” targeting slightly older, middle class consumers from the Hindi speaking region. Slowly gaining customer confidence with its authentic ayurvedic image and high quality products, the market has expanded to tier II and tier III cities and then the metro cities. The current trend of health awareness and healthy lifestyle gave the brand an added advantage. Patanjali has a vast range of products starting from food, grains, beverages, health care, medicines, personal care, cleaning agents, and Pooja items. Among them its Desi gee, Dantkanti toothpaste and Honey have already made news and forced its competitors to cut the prices.
Promotion of Brand by Baba himself
Initially the advertisements of PAL were limited, but now the company has increased its advertisements substantially. Ads are visible not only at spiritual channels like ‘Astha” but in entertainment channels like Zee, and Star tv. Without approaching any celebrity for brand endorsement, Baba Ramdev himself promoted the brand by encashing his yoga guru image and his fan followers and gathered instant prominence. Advertisements campaigned with Baba Ramdev gives the brand Patanjali enormous credibility. Most of the advertisements are campaigned with the very basic objective of creating awareness, rather than any other story building or creating fantasies. The company has never included any other promotional techniques like coupon, gift, refunds or rebates for launching or promoting its products.
Conclusion & future prospects-
Today Patanjali, the third largest player in Indian FMCG market, surpassed Nestle, Britannia, Godrej and Dabur. Only Hindustan Unilever and ITC are two companies ahead of Patanjali. Baba Ramdev has made a huge empire and his company Patanjali is not only growing by itself but also helping the ayurvedic market in India to grow at a tremendous level. PAL is aspiring to reach Rs20,000 crore of business by 2018 and is in the process of massive expansion with new production units coming at several places like Noida, Nagpur, Indore etc. Currently Baba and his associate are working on the business plan to venture into healthy eating outlets to challenge Multinational restaurants like McDonald, KFC, and Subway etc. Baba Ramdev’s name as declared as one of the “Most creative business people of 2016” in American Magazine and Mr. Balakrishnan has made a debut at Forbe’s 100 richest Indian list with 48th position. Whether Baba Ramdev and his disciple Acharya Balakrishna would be able to sustain the growth of Patanjali or it would be a one-man show and the growth will sluggish after a certain time?- question raised by many market experts. Again lot of issues and controversies have been raised about Patanjali’s substandard quality or about the wealth of Baba, and his associate. Inspite of all these, Baba Ramdev is very hopeful about the future of PAL and he claims that “Unlike Unilever, P&G, and Colgate, Patanjali spends its whole profit on education, research, cow promotion and protection, and will continue doing so. Patanjali an organisation owned by 125 crore (1.25 billion) Indians. So, I seek their cooperation in our mission,”
References:
· Anudeep Arora (Oct, 2017), “Conquering miles to reach a milestone: how baba Ramdev turned Patanjali into 5000 crores business”, Inspira- Journal of Modern Management & Entrepreneurship (JMME), Volume 07, no. 04, pp. 41-47
· Rahul Panchal, “11 secrets behind Patanjali’s success story” at Brand Yuva.
· Pavleen Soni1 and Harsimran Sandhu (July 14-15, 2017), “Patanjali: Reinventing Competitive Strategies in Indian FMCG Market” at Proceedings of International Conference on Strategies in Volatile and Uncertain Environment for Emerging Markets
· Sagar Malviya, “The success of Patanjali has helped the entire Ayurvedic consumer products segment” at The Economic Times, June 14, 2017
· Sarika Malhotra , “Six reasons behind Ramdev, Balakrishna and Patanjali’s success”, at Business Today, May4, 2017
Rupesh Maheshwari, “The epic rise of Patanjali: Game changer in Indian FMCG industry” at Your Story, March 17,
