CHAPTER 1

INTRODUCTION TO INDUSRY

Patanjali Ayurved Limited is an Indian FMCGcompany. Manufacturing units and

headquarters are located in the industrial area of Haridwar while the registered
office is located at Delhi. The company manufactures mineral and herbal products. It
also has manufacturing units in Nepal under the trademark Nepal Gramudhyogand
imports majority of herbs in India fromHimalayas of Nepal. According
to CLSAand HSBC, Patanjali is the fastest growing FMCG company in India. It is valued
at30 billion (US$470 million) and some predict revenues of ₹5,000
crore (US$780 million) for the fiscal 2015–16. Patanjali declared its annual turnover
of the year 2016-17 to be estimated ₹10,216 crore (US$1.6 billion).Ramdev baba has
stated in his interview withCNN-News18 that profit from Patanjali Products goes to
charity.

Patanjali Ayurved Limited

Logo

Type Private

Industry Consumer goods

Founded 2006

Founder Ramdev
Acharya Balkrishna

Headquarters Haridwar, India

Area served South Asia and Middle East

 List:
 India
 Nepal
 Bangladesh
 Azerbaijan
 Sri Lanka
 Middle East
Products Foods, beverages, cleaning
agents, personal care
products, Ayurvedic
medicine

Revenue ₹10,561
crore(US$1.6 billion) (2016-
17

Number of 200,000 (2011–12)

employees

Website www.patanjaliayurved.net
patanjaliayurved.org
 CHAPTER- 2
COMPANY PROFILE

INTRODUCTION

Patañjali (Sanskrit: पतञ्जलि) is a proper Indian name. Several important ancient Sanskrit
works are ascribed to one or more authors of this name, and a great deal of scholarship has
been devoted over the last century or so to the issue of disambiguation.

Amongst the more important authors called Patañjali are:

 The author of the Mahābhāṣya, an ancient treatise on Sanskrit grammar and

linguistics, based on the Aṣṭādhyāyī of Pāṇini. This Patañjali's life is dated to mid 2nd
century BCE by both Western and Indian scholars. This text was titled as a bhasya or
"commentary" on Katyayana-Panini's work by Patanjali, but is so revered in the Hindu
traditions that it is widely known simply as Maha-bhasya or "Great commentary". So
vigorous, well reasoned and vast is his text, that this Patanjali has been the authority
as the last grammarian of classical Sanskrit for 2,000 years, with Panini and Katyayana
preceding him. Their ideas on structure, grammar and philosophy of language have
also influenced scholars in other Indian religions such as Buddhism and Jainism.

 The compiler of the Yoga sūtras, a text on Yoga theory and practice, and a notable
scholar of Samkhya school of Hindu philosophy. He is variously estimated to have
lived between 5th century BCE to 4th century CE, with more scholars accepting dates
between 2nd and 4th century CE. The Yogasutras is one of the most important texts
in the Hindu tradition and the foundation of classical Yoga. It is the Indian Yoga text
that was most translated in its medieval era into forty Indian languages.[16] Also, the
third chapter is the basis for the TM-Sidhis.

 The author of a medical text called Patanjalatantra. He is cited and this text is quoted
in many medieval health sciences-related texts, and Patanjali is called a medical
authority in a number of Sanskrit texts such as Yogaratnakara,
Yogaratnasamuccayaand Padarthavijnana. There is a fourth Hindu scholar also
named Patanjali, who likely lived in 8th-century CE and wrote a commentary on
Charaka Samhita and this text is called Carakavarttika. According to some modern
era Indian scholars such as P.V. Sharma, the two medical scholars named Patanjali
may be the same person, but completely different person than the Patanjali who
wrote the Sanskrit grammar classic Mahabhasya.
Production

Patanjali Food and Herbal Park at Haridwar is the main production facility
operated by Patanjali Ayurved. The company has a production capacity of 350
billion(US$5.5 billion) and is in the process of expanding to a capacity of 600
billion(US$9.4 billion) through its new production units at several places, including
Noida, Nagpur, and Indore. The company plans to establish further units
in India and inNepal.
In 2016, the Patanjali Food and Herbal Park was given a full-time security cover of
35 armed Central Industrial Security Force (CISF) commandos.The park will be the
eighth private institute in India to be guarded by CISF paramilitary forces. Baba
Ramdevis himself a "Z" category protectee of central paramilitary forces.

Sales and distribution

Patanjali Ayurved sells through nearly 4,700 retail outlets as of May 2016. Patanjali
also sells its products online and is planning to open outlets at railway stations and
airports.Patanjali Ayurveda has tied up with Pittie Group and Kishore Biyani's Future
Group on 9 October 2015. As per the tie-up with Future Group, all the consumer
products of Patanjali will be available for the direct sale in Future
Group outlets. Patanjali Ayurveda products are also available in modern trade stores
including Reliance retail, Hyper city and Star Bazaar apart from online
channels. Patanjali Ayurved, co-founded by yoga guru Ramdev, is targeting Rs
10,000-crore revenue in 2016-17, after sales grew 150 per cent in the previous
financial year to Rs 5,000 crore.
Patanjali Ayurved has also started its FMCG expansion in form of dealership and
distributorship channels across the country and expects wider growth in Overseas
distribution as well.

Executive Summary
The report titled "Company Profile of Patanjali Ayurved Limited - New Product
Pipeline and Brand Image to Drive Company Growth" provides a comprehensive
analysis regarding the performance of the company and its FMCG products in India. The
report covers aspects such as the market size on the basis of revenue generated from the sale
of FMCG's under various product categories. The revenues of the company has been
segmented based on various product categories including nutrition and supplements,
groceries, personal care, home care, ayurvedic medicines and books and media. The
revenues of the company have also been segmented on the basis of regional sales and
distribution channel. The publication also covers the value chain, working model, consumer
profile and pricing analysis of Patanjali products.

In addition to this, a comparative analysis of best selling Patanjali products including honey,
toothpaste, face wash, instant noodles, biscuit and cookies and hair oil with other FMCG
companies has been showcased in order to understand the market share. The financial
performance of the company, balance sheet, P&L statement along with the expected future
performance of the company has also been showcased in the report. This report will help
industry consultants, FMCG manufacturers, dealers, retail chains, potential entrants into the
FMCG segment and other stakeholders to align their market centric strategies according to
the ongoing and expected trends in the future.

Outline
Patanjali Ayurved Kendra Ltd was founded by Swami Ramdev and Acharya
Balakrishna on September 27th, 2007. It started its operation in Katmandu, Nepal
to provide holistic, natural and effective ayurvedic treatment. Patanjali Ayurved
Limited (PAL) has three manufacturing units at Haridwar, Uttarakhand with its
registered office in New Delhi. The initial project of Ramdev was his Patanjali
Yogpeeth and since its inauguration in 2006, it has been labeled as one of the
largest centers for research on yoga and ayurveda in the world.

Manufacturing Facility and Production

The central government and Patanjali had invested INR ~million and INR ~ million
respectively, in the Food and Herbal Park at Haridwar. It has been estimated that
~ individuals will get direct employment and two lakh people will benefit
indirectly from the park. The park will produce agricultural products, products
related to nature and products related to herbs and plants. The food park has the
current capacity to produce ~ tons per month of food and supplements, ~` tons
per month of juices and candies, ~ tons per month of cosmetics and herbal
products. It requires 1.72 lakh metric tons per year of raw material as an input. As
part of the company's future strategy to increase supply and target a larger
customer base, PAL plans to set up manufacturing units in each state with an
investment of INR 500 million to INR 1,000 million.

Competitive Scenario

In the FMCG market, the Q4 results for FY'2015-2016 indicate that sales volume is
not growing as rapidly as expected. The growth margins have diminished and have
taken a toll on all major companies. HUL's revenue growth has been consistently
falling in the past seven quarters from ~% in quarter ending June 2014 to ~% in
quarter ending December 2015. During the same period, ITC's FMCG business has
fallen from ~% to ~% in terms of revenue growth. PAL's competitors have received
its entry in good health as they believe that the revival of their ‘herbal trend'
could help them reap higher profits from increasing sales in this segment. Emami
had recently acquired Kesh King (medical hair oil brand) and was about to take
over Indulekha (hair oil), before losing out to HUL in the bidding. HUL has also
revived its Ayush portfolio of brands apart from getting back into the herbal hair
oil category.

Market for Patanjali Products

PAL, which started as a small pharmacy, has expanded to sell the full range of
consumer categories, from edible oils, biscuits and noodles to toothpaste, hair,
skin care products and groceries. The revenue from the sale of PAL products
increased from INR ~ million in FY'2010 to INR ~ million in FY'2015, achieving a
CAGR of 65.7% during the same period.
Personal Care segment contributed the highest to PAL's revenue (~), amounting to
INR ~ million in FY'2015. Nutrition and supplements came in second with a
percentage of ~% and added INR ~ million to PAL's overall revenue. PAL's budding
grocery segment accounted for a share of ~% of total revenue, amounting to INR ~
million in FY'2015. Home care (~%), Ayurvedic medicines (~%) and Health Care (~%)
contributed INR ~ million, INR ~million and INR ~ respectively, to the overall
revenues of the company.

Expected Future Performance of Patanjali Products

The growing demand for organic products and rising health concerns have caused
individuals to prefer detergents, soap and hand wash without any added chemicals. Future
estimates indicate the growth in this category, however, it has been forecasted that toiletries
will contribute ~% to Patanjali's overall revenue. Hair oil and Patajali's shampoo are
expected to boost the revenues generated from the hair care segment and is projected to
contribute ~% to Patanjali's overall revenue. Majority of revenue generated by the hair care
segment comes from the northern region of the country. The rising demand for herbal and
organic products will see an augmenting demand for Patanjali's toothpaste in the future,
especially from the rural market and this is expected to boost revenues of this segment to
INR ~ million by FY'2020. On the assumption that Patanjali will manufacture and sell new
lines of body lotion and face wash, targeting men and children will help further boost the
contribution of the body care segment to Patanjali's overall revenue with a share of ~% by
FY'2020.

SWOT analysis of Patanjali

Patanjali Ayurved limited is the brainchild of Baba Ramdev who is known for his sermons
and his devotee Acharya Balkrishna. Acharya Balkrishna ji is the CEO of Patanjali.
Incredibly, Patanjali came into the picture less then a decade back but has taken a huge
share of the Indian market due to the large scale following of Baba Ramdev. Patanjali
registered a revenue of INR 5000 crores in 2015-16 growing at 150% ove the previous

year.

Products under Patanjali:

Patanjali produces about 700 different types of products. It has products in the
following categories:

 Natural Health Care

 Natural Food Products
 Ayurvedic Medicine
 Herbal Home Care
 Natural Personal Care

Some of the Popular Patanjali products are Patanjali Dant Kanti, Patanjali Kesh
Kanti, Patanjali Chyawanprash, Patanjali Honey, Patanjali Ghee etc.

Strengths in the SWOT ANALYSIS OF PATANJALI :

Baba Ramdev: The exponential growth of Patanjali can be credited to Baba Ramdev and
his popularity. For a newly formed FMCG in India, it would have been impossible to show
the kind of growth that Patanjali has shown in such a short period of time. But the fan
following and goodwill of Baba Ramdev guaranteed that Patanjali grows quickly and
becomes a routine name in the Indian households.
Strong patriotism: Patanjali has used the India card to its advantage and has always
marketed that its a brand made in India, for Indians. Most of the brands in India are
international brand. Patanjali actively asks Indians to buy India made products to help the
economy of the country. Besides this, the quality of the products have helped in the
fantastic growth of Patanjali.

Ayurveda and Herbal: The Products that Patanjali offers are made from Ayurveda and
Herbal natural components. The Swadeshi products also have played an important role in
the success of Patanjali. India has never been low on plants or vegetation and we get a lot
of naturally grown medicines in our dense forests. As a result, India is one of the leaders
in Ayurveda.

Penetration Pricing: Patanjali products are generally priced at 20-30 % lower than the
competitive brands and thus it becomes impossible for the competitive brands to compete
with Patanjali on price. The company sources the products directly from farmers and thus
cuts on middlemen. Hence, they are able to produce at lower costs. A comparison of prices
for some products is given below are given below.

Price Other
Patanjali
Comparison Brands

Rs. 115 Rs.

160
Chyawanprash
(500 (500
gm) gm)

Rs.
Honey Rs. 135
199
 (500 (500

gm) gm)

Rs.
Rs 110
159
Shampoo (200
(200
gm)
gm)

Strong Distribution channels: Patanjali products are sold through medical centres
such as Patanjali Chikitsalayas and Patanjali Arogya Kendras, non-medical centres such as
Swadeshi Kendras. Patanjali already has 15,000 outlets across India. Patanjali was earlier
criticised for itsdistribution strategy, but it has now improved it by distributing through
General retail outlets and has recently tied up with the Future group for distribution through
Modern retail. They have now transformed its weakness into a strength.

E-commerce advantage: Patanjali sells very well through the E-commerce companies
and has a lot of packages of products which it sells online. So even ifpeople are not nearby
a Patanjali store, but they believe in Baba Ramdev or want to purchase Indian products,
then they can do so online via E-commerce.

Word-of-Mouth Promotion: For a new company especially in the

consumergoods category, a high share of its expenditure goes into advertisements
andpromotions. Patanjali followed a word-of-mouth promotion strategy initially and did
not spend much on promotions and advertising. Patanjali depended on over the Brand
loyalty of its customers.

Keeping up with the trends: Owned by Babas and Swamis, Patanjali was supposed to be a
conventional Indian company but it has surprised everyone by bringing in various changes
required to be at par with its contemporary brands. Be it advertising using celebrities as
Brand ambassadors, Entering modern retail or using E-commerce as a platform. Patanjali
has also understood the potential of digital media and social media platforms and is also
spending on these channels.
Weaknesses in the SWOT ANALYSIS OF PATANJALI :

Over dependency on Ramdev: For many of its consumers, Patanjali is still synonymous to
Baba Ramdev and hence any actions of Baba Ramdev will have repercussions on the brand
itself. Baba Ramdev’s political affiliations are also well known and hence if at all he is
targeted for any political vendetta, Patanjali will also suffer.

A low number of manufacturing units:Patanjali has set itself an ambitious targetof INR
10,000 crores for the fiscal year 2016-17. For that to happen, Patanjali would need to set
up manufacturing units in different parts of the country which would require heavy
investments. It also would have to move from the word-of-mouth strategy to nationwide
promotional campaigns.

Penetration pricing is not long term:Patanjali might have to compromise on its pricing
strategies if it wants to expand and thus it’s a big challenge for Patanjali. It cannot sell at
such low costs for a very long term. Any company needs profits to drive more sales and
therefore earn more profits. Its a cycle. But if Patanjali does not earn much, then it cannot
spend much and cannot expand.

Product Dependence: While Patanjali has many products in its kitty but a major part
of its revenues are dependent on 5-6 of its main products such as its toothpaste and
shampoo. They need to push the other products more to achieve its ambitious target.
Low margin to distributors: Patanjali offers much lower margins to distributors and
retailers as compared to other consumer goods company, since it is playing a game of
volume and not margins. That’s the reason for it being ademand run company.

Lack of experienced management graduates: Patanjali does not have a large pool of
management graduates and thinks tanks which can be a problem when they look for
expansion throughout the country or globally.

Opportunities in the SWOT ANALYSIS OF PATANJALI :

Growing organic sector: Patanjali has been successful in creating awareness about the
benefits of using herbal and natural products whihavecreated a market for itself. The
awareness has spread and the demand is ever growing.

Expand Rural: With the portfolio of products that Patanjali has, it has great potential in
the rural market and should look to expand its operations in the vast rural market of India.

Going Global: Patanjali has a greatopportunity to expand globally and can look for
Middle East and African nation in the beginning. Various other companies such
as Dabur have already expanded globally and have been successful.

Tie ups: Patanjali has successfully tied up with Future group and should continue tie up
with modern retail chains and increase its E-commerce sales.

Diversify: While Patanjali is now present in retail products, it has not entered clothing
which is another area where competitors like Relianc and Aditya birla have expanded
successfully. So Patanjali can plan on diversifying its product portfolio even further to
Khaadi, making it a fashion statement and being true to the roots of Patanjali being an
Indian brand.

Threats in the SWOT ANALYSIS OF PATANJALI;

Increasing Competition: FMCG majors such as HUL, Marico, etc. and new entrants such
as Sri Ayurveda are also entering the organic market after the awareness created by
Patanjali which increases the competition in the market.

Negative Word-of-Mouth: Any negative word-of-mouth created on social media

platforms can affect its position in the market.
Poor reap can affect business: Patanjali is heavily dependent on natural ingredients
and products and hence poor agricultural reap can affect its sales.

Price war: A price war is good for consumers but it is detrimental for business. The
longer the price war, the more is the effect on the brand. Companies like HUL, Colgate and
others have been at the top for long. They have deep pockets and they will naturally respond
to Patanjali. Such a price war will have drastic effect on Patanjali’sprofitability, especially
because the brand is already selling at very low margins.

STP Analysis
Segmentation

From the product line up of Patanjali Ayurved, it can be safely assumed that it does not
segment the customer base as such, making the whole population its potential customer.
As per Ramdev’s vision of bringing welfare and manufacturing good and unadulterated
natural Ayurveda products easily available to the common masses, this stance of not
segmenting the market as such seems aligned. However on analysis, a broad segmentation
can be observed.
Geographic Segmentation (North India & South India)

It is observed that Patanjali products are a huge hit in the North Indian market but not that
much in South India. One reason might be that Ramdev being from the Hindi belt and
Aastha channel airing in Hindi language, its prominence is not that much down in south.
The same reason holds true for its packaging, which uses either English or Hindi. To be
noted that Patanjali owes its huge success to Ramdev’s active image association with it.

Behavioral Segmentation (based on lifestyle and types of products

consumed or used)

The consumers can be segmented based on their lifestyle & health preference and by the
type of product they use. The main users of Patanjali products are the people who are health
conscious and want to use pure unadulterated natural Ayurveda products.

Demographic segmentation (based on age)

A clear segmentation can be done based on age. The young generation, i.e. typically
children to young adult below the age of 35 years is a clear segment, while the rest of the
population aged more than 35 years are the other segment. This segmentation based on age
makes sense since young adults & children enjoy life and often is not serious about health
or life, which makes them not a user of these products. On the other hand, once people turn
a little old with the onset of middle age, they start thinking about health &the future. These
are the people who generally make the purchase of Patanjali products.

Psychographic Segmentation

Based on the psychology and mindset of the people, this segmentation is taken into
account. There is huge overlap between the people who attend Ramdev’s Yoga camps or
follow him on Aastha. They perceive him as an ascetic and hence his products too shall be
good which makes them purchase these Ayurveda products of Patanjali. Also to be noted
is that Ramdev wanted to create a Swadeshi sentiment among the customers and thus
pitched against FMCGs who are mainly MNCs or use raw materials/ procedure of foreign
origin.

Targeting

Currently Patanjali is competing in all FMCG categories catering to the whole population,
which is otherwise called Total Market Coverage Targeting Strategy. They have diversified
into almost all categories like oral care, hair care, skin care, groceries, health drinks &
supplementary, packaged food etc.

Also since they have no differential products within the same product portfolio, this
substantiates the fact that they are not targeting any particular segment, rather serving the
whole population with their offering. To reach to the maximum number of potential
customers, it has to target specifically though. The house wives and the elderly of the house
are the influencers and decision makers in the purchase process of Ayurveda products. By
just producing packages with South Indian languages, the south market can be targeted.

At present Patanjali is contending in all FMCG categories obliging the entire populace,
which is generally called Total Market Coverage Targeting Strategy. They have expanded
into all categories like oral care, hair care, healthy skin, basic needs, health drinks and
packaged beverages and so on. Additionally since they have no differential items inside
the same item portfolio, this substantiates the fact that they are not focusing on a specific
section, rather serving the entire populace with their advertising.

To reach to the greatest number of potential customers, it needs to be more specific in its
targeting though. The housewives and the elderly of the house are the influencers and chiefs
in the buy procedure of Ayurveda items. By simply producing packaging with South Indian
dialects, the market in the south can be focused on.

Positioning

The positioning statement of Patanjali is derived to come to the following: “For the mass
Indian consumers, Patanjali Ayurveda offers the complete range of unadulterated
natural/herbal/ organic products which are a healthier alternative to the other FMCG
productsat a significantly lower price.”

Ramdev wants to associate Patanjali holistically with Arogyam eco-system, which means
disease-free long life. This is actually tying up of yoga, pranayama and Ayurveda to create
such a possibility, something which Ramdev banks on.
He also links the idea of indigenous (Swadeshi) to the company’s products and does cause
marketing for the company by saying that they are helping the farmers to earn more. He
projects Patanjali as a not-for-profit company and that it is there to serve the masses. He
mentions that they do not keep margins on most of the products and hence the mouth-
watering prices

STRATEGIC PLANNING FOR PATANJALI UNDER “MAKE

IN INDIA”
COMPANY ANALYSIS: PATANJALI

In the present scenario, the market of ‘Wellness Industry’ in India is less than 2% as
compared to the international market. There are untapped opportunities in the wellness
industry because of which the government has given special focus on this sector in the
‘Make in India’ campaign. Active involvement from private and public players can create
huge impact and buzz in the global market. The motives are the expansion and spreading
the awareness and usability.
Patanjali Ayurveda is maker of ayurvedic consumer products and is one of the fastest
growing consumer companies in India. The company was formed by Baba Ramdev in
1997 in collaboration with Acharya Balkrishna (scholar of Ayurveda, Sanskrit and Vedas)
to manufacture ayurvedic medicines. Ramdev has focused on Yoga while Balkrishna is
spreading and channelizing Ayurvedic products.

The company provides a bunch of products and services which revolves around the
consumer needs. Providing them high-quality products at attractive prices is the USP. It
has become a household name. The company sources raw materials directly from farmers
to cut middlemen cost for increasing profits.

SUBSIDIES AND BENEFITS

1. The Ministry of AYUSH (Ayurvedic, Yoga, Naturopathy, Unani, Siddha and

Homeopathy) has received Rs.1214 crore in budget 2015-2016. Government’s intent to
foster growth in this sector is very well evident. The areas to be covered in lsubsidising
the sector are:

2. Developing the AYUSH educational Institutes and enforcing extensive quality control
practices in the sector.

3. Focussing on Information, Education and Communication by creating awareness

through “Arogya Fairs”, exhibitions and also multimedia and print media campaigns.

4. Conservation, Development and Sustainable Management of medicinal plants.

5. The Centre of Excellence establishment supporting innovation at public and private

Institutions.

Some essentials of the scheme are:

1. Providing infrastructure to food processing on predetermined basis

2. Value addition to agricultural commodities to be ensured

3. Establishing sustainable raw material supply chain

4. Inducing of latest technology in the sector

5. Pooling of resources for activities complementing food processing

6. Quality assurance by process control, capacity building and optimization

IMPLEMENTATION STRATEGIES

The brand needs to frame and practice rigorous implementation framework to touch upon
various developmental aspects:

1. Firstly, encouraging Research and Development will inculcate and promote the tradition
of Ayurvedic medicines and herbal formulations. Standardization should be encouraged at
this platform as constituents of products must be uniform.

2. Training human resources in production units and service centres. Production units

must have experts for quality products. The Service Centres (yoga centres, Ayurvedic spa,
studios, etc.) should have qualified professionals to serve the customers.

3. Identifying issues related to exports by knowing the target market and segment to be
catered in that market. Simplifying the export process coupled with durable packaging.

4. Establishing of an authority to check authentication and quality of products before

export. Safety measures should be practiced during the production and packaging.

5. Having registrations with various regulatory authorities in the country and abroad to run
the business smoothly.

6. Preservation of Intellectual Property Rights becomes critical with the products and
services being exported to foreign countries.

7. Infrastructure improvisation by bringing in new technologies at factory outlays,

equipment’s manufacturing and service offering.

8. Getting the products and medicines ISO 9000 certified to export to major international
markets.

9. Opening of new centres in areas like north-east. Enforcing R&D and infrastructure in
areas rich in flora and fauna of ayurvedic importance.

10. Medical tourism can be uplifted in collaboration with the hospitality industry
POTENTIAL CHALLENGES

The company can face impeding challenges in future. Some of the budding challenges are:

1. Proper amount of training and skilled labour will be required to overcome constraints
that the industry has as a whole.

2. Promoting products in the international market because of improperly strategized

channels of doing business in the foreign market.

3. Determination of degree of localization is not clear and hence requires a lot of research
for various markets.

4. With growth becoming prominent lack of IT knowledge, trust, capital access, research
and innovation will become indispensably important.

5. ISM&H uses plant materials extensively for preparation of their drugs. Although 8000
plants are stated to have medicinal properties, only 500 of them are generally used. So the
resource exploitation is inappropriate.

Impact on Global FMCG companies in the Indian Market

The Indian FMCG market is a fiercely competitive one with products of the same category
across brands has almost no differentiation per se and priced almost the same, making all
of them a ‘me too’ product. All the players in the FMCG market hence keeps tab on its
competitors. Any change in price points or a new product launch is quickly copied and
tackled by the rest of the players giving very little space to play in this market. In such a
market, Patanjali came with a whole new offering of pure, natural, herbal & indigenous
Ayurvedic products with medicinal values and health benefits that also at a price point
lower than these FMCG brands. Not only they had a differentiating factor, they got a
significant cost advantage. This disrupted the whole market as Patanjali flooded the market
with their products. The impact was huge on the other FMCG brands, particularly in those
categories where Patanjali was exceptionally strong. Colgate was hit in the tooth paste
category as Dant Kanti ate up its market share which is up to 4-5%. In the wake of Patanjali
Dant Kanti’s success, both volume growth and share of the company fell down in Dabur
was also affected by the impact since they also played along the herbal range.

As a counter move to Patanjali’s rise, Dabur too wants to revamp its offerings in the
women’s healthcare range. Dashmularishta and Ashokaristha, which are both traditional
Ayurvedic post-natal health tonic and menstrual pain relief tonic respectively is introduced
by them. They want to enter the baby care and health segment too soon after this.

HUL also is taking counter measures to prevent Patanjali eating up its share. It is focusing
on e-commerce hoping that digitalization will take over the Ayurvedic market too, and
when that happens, they become the key player by having the early mover advantage. It
relaunched its Ayurveda brand Ayush as a premium brand, thus avoiding price wars with
Patanjali Ayurvedic products. Recently, it also acquired Indulekha which was Mason
group’s flagship brand and positioned differently as ‘naturals’ and ‘therapeutic’.

Feasibility - Can other FMCG houses follow the footsteps of

Patanjali?
Patanjali has become a strong player in the FMCG sector and even though it offers
Ayurvedic and herbal products only, it is directly competing with the mainstream FMCG
players like Colgate, HUL, P&G and Dabur. Understanding the impact created by the
presence of Patanjali, HUL, P&G and ITC have started equipping their arsenal by adding
herbal ranges to their product line mainly through acquisition discussed in other part of our
study. Let us now see whether this move by these companies is feasible or not.

Firstly, it is to be observed that Ayurveda or herbal products was not new to Indian market.
It existed before Patanjali came into scene. But those products were either premium &
expensive or totally local & unbranded. In the premium & expensive scenario, those brands
were restricted to a very small market & customer base which was not sustainable in the
long run and also was out of reach of common mass. In the case of local & unbranded, it
suffered from quality & image issues and was also not manufactured in mass. What was
common in both the cases was that neither of them could cater to the huge number of
customers and give them the benefits of Ayurveda. Patanjali came into the market and
addressed exactly this issue by filling the gap and bringing Ayurveda to the common
household at an affordable, rather cheap price. In this regard

Five lessons that Patanjali teaches India's FMCG sector

Rise and rise of Patanjali

A decade ago it was modern trade which changed the way Indians shopped. Then came e-
commerce and online shopping.And this time around it is Patanjali Ayurveda – the latest
force to disrupt the branded consumer goods sector.Its raging popularity and strong brand
resonance have some incisive lessons for the Indian fast moving consumer goods (FMCG)
sector.

Brand Premium 2/7

A brand doesn’t have to charge a premium to resonate better with its consumers.Patanjali
products are cheaper than its peers in the same category.“The whole logic of brands charging
premium and using that premium to advertise more has been turned upside down by
Patanjali products”, says Milind Sarwate, former CFO of Marico and founder of Increate
Value Advisors.

Product Efficacy - the ultimate USP

Patanjali has brought the focus back on product efficacy. Rising above the noise of
advertising, products have to first deliver value to the consumers. Ghee and tooth paste are
the two most popular products of Patanjali – even though both of these have enough local
and multinational competitors in the organised sector.According to a recent sector report by
Spark Capital, while disruption is painful in the short term, it is slated to bring back a key
value proposition of FMCG products – product’s efficacy.
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.The Maggi ban last year had showed how brand
ambassadors can receive flak in case the brand falters.

Consumers have the last laugh

Emergence of Patanjali helps keep the established players on their toes and provides the
consumer the benefit of more efficacious products at lower prices.It reminds the FMCG
companies that peak margins cannot be sustained at the cost of the consumers.

Scope for Innovation or Disruption

Patanjali has reinforced that there is scope for disruption at any point in the industry.Despite
the high clutter & penetration and subdued consumer demand, Patanjali products could make
a mark.

Six reasons behind Ramdev, Balkrishna and Patanjali's success

In 1995, Ramdev was a little known yoga teacher in Haridwar when his close associate,
Acharya Balkrishna, and him set up Divya Pharmacy - under the aegis of Ramdev 's guru,
Swami Shankar Dev's, ashram - to make Ayurvedic and herbal medicines. The medicines
proved so popular that Ramdev and Balkrishna sought to scale and diversify into other
products. But that proved difficult since Divya Pharmacy was registered under a trust.

At the same time, with Ramdev's popularity soaring, substantial funds began to come in -
sizeable loans from the likes of NRIs Sarwan and Sunita Poddar, as well as locals such as
Govind Agarwal - which in turn helped to get bank loans. Thus was born Patanjali Ayurved
as a private company in 2006, which has since rolled out a range of products - in healthcare,
hair care, dental care, toiletries, food and more - at breathtaking speed.

"When Divya Pharmacy was set up, we hardly had the money to pay for the registration,"
Ramdev told Business Today last year. "For the first three years, till 1998, we distributed the
medicines free. From buying the raw materials to grinding and mixing, we did everything
ourselves," he added.

Today, Balkrishna stands among the richest men in India and Patanjali as one of the main
players in the Indian fast moving consumer goods (FMCG) sector. While Ramdev is busy
propagating Yoga and Ayurveda to create a market for the products, Balkrishna is creating
the products. Their partnership has been phenomenal, but there are also many other reasons
behind the success story:
Media attention: Ramdev rose to national fame as a yoga guru through his programmes
on TV channels - Sanskar in 2001 and Aastha from 2003. He readily acknowledges the role
of the media in his rise. "Patanjali ko bananey mein ek se 10 per cent humara role hai, baaki
role media ka hai (My own role in the rise of Patanjali is just one to 10 per cent, the rest of
the credit goes to the media)," he told Business Today website.

Smart pricing: Yet another reason for Patanjali's success is the thrift it practices. "Our
profit margins are miniscule because the main aim is not to make profit," said Ramdev.
"Profiting from patients is against the philosophy of Ayurveda, so we aim at minimum profit
from our health products. Our input costs are low because we source directly from farmers,
avoiding middlemen." Salaries are also modest. "Humare yahaan crore ki salary paane waala
koi vyakti nahee hai, (There is no one in our company who is paid crores as salary)," he
added. "Most companies have administrative costs of around 10 per cent of their revenue,
but in our case it is just two per cent."

Retail outlets: Initially, Patanjali shunned the conventional distribution network,

preferring to rely on its own channels of super distributors, distributors, Chikitsalayas
(franchise dispensaries) and Arogya Kendras (health centres which sell Ayurvedic remedies).
Once it turned to retail outlets from 2011, revenue began to multiply manifold.

Variety of products: Already, a few Patanjali products have made major inroads - apart
from desi ghee, its toothpaste Dant Kranti, for instance, launched in March 2010, brought in
revenues of Rs 200 crore in 2014/15. Patanjali has also ventured out to produce many other
new items that were mostly produced by foreign companies in recent months. Patanjali also
sells toothpastes, unpolished pulses and detergents.

Swadeshi factor: Patanjali is happy to co-exist with indigenous companies, multinational

ones are a different matter. "Humara ek simple funda hai: MNCs ko replace karna (We have
a simple principle: we want to replace MNCs)," said Ramdev.

"We don't want to put anyone down, but we would like to instil swadeshi pride so that Indian
money does not go out of the country." He is aware that the competition is gunning for him.

"The MNC mindset is such that whenever an Indian does anything, MNCs think we are
competing with them," he said. "MNCs are creating special war rooms to combat Patanjali.
We are not into any such war rooms. We don't analyse other companies' strategies or conduct
market surveys and feasibility studies. It is only when people ask for cheap and healthy
options that we try to respond."

Advertising: Patanjali's own advertising was limited in the past, but has increased
considerably of late, with ads appearing on general entertainment TV channels (GECs) such
as Star and Zee. The company has also reached out to regional Southern channels.
A reality check on Patanjali
The media and analysts will agree that the top bosses of multinationals in India tend to be
boring, strait-laced and politically correct. This is probably why Baba Ramdev, yoga guru,
brand ambassador and maverick founder of Patanjali Ayurved, has been getting such rave
reviews. He cheerfully does headstands while posing for press shoots, rants against MNCs
for conspiring against him and ‘looting’ India, and puts forth revenue targets that are four
times his last reported sales.

The rise of Patanjali has inspired CLSA to write a wistful research note titled “Wish you
were listed, Patanjali” heaping praise on the business model. Brand consultants have credited
Patanjali with bringing about a “tectonic shift” in FMCG branding and there are stories
aplenty about how Ramdev is set to oust the Unilevers and Nestles in India.

Growing, but not that big yet

As an unlisted, closely held company, Patanjali Ayurved’s audited financials are not easily
accessible to the public. That must be reason why Ramdev’s ambitious targets (₹10,000
crore sales by FY17) aired in various interviews are often confused with the firm’s actual
numbers.

According to its last official filings for FY15, Patanjali Ayurved had total sales of ₹2,013
crore. A report by Brickworks Ratings estimates provisional sales for FY16 at ₹3,267 crore
(for 10 months up to January 2016). Annualising, this would place Patanjali ahead of smaller
listed FMCG players such as Jyothy Labs (₹1,644 crore) and Emami (₹2,600 crore), and
neck-and-neck with GSK Consumer (₹4,500 crore) and Colgate Palmolive (₹4,100 crore)
last fiscal. But it is yet to break into the big league of Hindustan Unilever (₹31,000 crore),
Godrej Consumer (₹9,000 crore), Dabur India (₹8,450 crore), Nestle India (₹8,200 crore)
and Marico Industries (₹6,100 crore).

To be sure, Patanjali’s sales growth rates in the last three years have been scorching, with
revenues growing at a 55 per cent annual rate when the FMCG market was inching up at
8-9 per cent. But these growth rates have to be seen in the context of a low base, and the
vast product portfolio that Patanjali relies on for its critical mass.

Carpet-bombing strategy

Though Patanjali’s current size would suggest that it has already made big market share
gains at the cost of the MNCs, this isn’t true yet. This is because Patanjali’s strategy relies on
spreading itself thin across dozens of FMCG categories and carpet-bombing consumers with
scores of products, rather than on focussing its energies on one or two large wins.

Patanjali’s portfolio spans personal care products, toothpastes, home cleaning products,
dishwash and detergents, staples such as atta, salt and cooking oil and tea, juices and dairy
products, apart from a range of ayurvedic formulations. With sales of about ₹5,000 crore
splintered across as many as 390 products, Patanjali is yet to grab a large enough share of
any category to pose a material threat to the leading player. Even in toothpastes, the only
personal care category where its Dant Kanti, a best-seller, is snapping at the heels of an
MNC, Patanjali’s market share is just 5 per cent to Colgate’s 55.In the food or dairy
categories where Patanjali has made significant inroads, there is little MNC presence.Any
aggressive gains by Patanjali in these categories may threaten desi players such as Emami,
Dabur India or Amul far more than the MNCs.

Tough to be natural
Over the long term, the ayurvedic plank on which Patanjali’s products are positioned may
work better for niche brands than for category leaders. While all-natural ingredients may
have consumer appeal in dairy, cooking oils, honey or health drinks, they may prove less
efficacious in household cleaning products, detergents or even processed food.

If Patanjali is serious about using fully organic formulations and natural ingredients, it has a
tough task on its hands in procuring these ingredients to fuel its furious growth. While
there’s already an efficient, low-cost global supply chain in place for chemical ingredients
that go into conventional FMCG products, there are no such readymade solutions for
ayurvedic versions. In fact, these are the key reasons why Indian FMCG players who
enthusiastically adopted the ‘herbal’ plank have tasted limited success in the past, whether it
was the desiHimalaya and Zandu Pharmaceuticals, or Hindustan Unilever which had to
shelve its Ayush rollout.

Pricing and costs

All this suggests that Patanjali’s current business model of offering ‘all-natural’ products, at
steep price discounts of anywhere between 10 and 30 per cent to competing MNC brands,
doesn’t quite add up. Until FY15, Patanjali’s business model was very distinct from the
MNCs that it loves to hate. The company’s umbrella branding strategy helped it gain loyal
consumers among Ramdev’s followers and those with a yen for swadeshi products.

As its products only retailed through 10,000 exclusivechikitsalayas and yoga kendras, it
could dispense with market research and take a hit-or-miss approach to product rollouts.
From its centralised mega-facility in Haridwar, the firm churned out as much as its
customers demanded. But if Patanjali is to succeed in its ambitious plans of giving the
MNCs a run for their money, it may have to abandon these quaint practices. A national
presence will require substantial investment in manufacturing units in southern, western and
eastern India. Word-of-mouth may need to be supplemented by a national advertising
campaign.Acquiring a nationwide distribution presence will require more sophisticated
supply chain and inventory management.

It is clear that Ramdev is well aware of these compulsions. In FY16, the company kicked off
a television and print advertising campaign, forged alliances with big-box retailers like the
Future group and entered the e-commerce channel. But this still leaves us with two big
questions. First, how will Patanjali’s profits bear up under all these additional expenses?

In FY15, Patanjali Ayurved reported a 23 per cent operating profit margin with a 16 per cent
net profit margin. This was fairly comparable with the margins (operating profits at 17-25
per cent) of the listed FMCG firms. But then, listed FMCG players manage these margins
after spending 12 to 18 per cent of their sales on advertising and promotion. So it isn’t clear
how Patanjali will accommodate similar spends if it is to continue with its low-price strategy.
The even more burning question is where Patanjali will find the capital needed to bankroll its
mega investment plans. In fact, with over 90 per cent of its equity held by Acharya
Balkrishna, it isn’t even clear how Patanjali has found all the equity for its successes so
far.Yes, the MNCs that Ramdev reviles do make huge profits and pay out generous
dividends and royalties to their foreign parents. But by virtue of being publicly listed
companies in India, multinationals such as Hindustan Unilever or Nestle India have also
contributed to the exchequer and turned many ordinary investors into millionaires.For
Patanjali to gain similar credibility, it needs to explore a listing on the public markets too.
Not only will that clear the air on the company’s funding sources, it may open up one
more swadeshi option for Indian investors in FMCG stocks.

Research Methodology

MEANING OF RESEARCH DESIGN

The formidable problem that follows the task of defining the research problem is
the preparation of the design of the research project, popularly known as the
“research design”. Decisions regarding what, where, when, how much, by what
means concerning an inquiry or a research study constitute a research design. “A
research design is the arrangement of conditions for collection and analysis of data
in a manner that aims to combine relevance to the research purpose with economy
in procedure. “In fact, the research design is the conceptual structure within which
research is conducted; it constitutes the blueprint for the collection, measurement
and analysis of data. As such the design includes an outline of what the researcher
will do from writing the hypothesis and its operational implications to the final
analysis of data.

Methods of Data Collection

The task of data collection begins after a research problem has been defined and
research design plan chalked out. While deciding about the method of data
collection to be used for the study, the researcher should keep in mind two types
of data viz., primary and secondary.

Primary method of data collection : The primary data are those which are collected
afresh and for the first time, and thus happen to be original in character.

Secondary method of data collection : secondary data, on the other hand, are
those which have already been collected by someone else and which have already
been passed through the statistical process. The researcher would have to decide
which sort of data he would be using (thus collecting) for his study and accordingly
he will have to select one or the other method of data collection.

In the present study we use secondary method of data collection and it is collected
through the following ;books ,magazines.

Marketing mix
The marketing mix is a foundation model in marketing. The marketing mix has been
defined as the "set of marketing tools that the firm uses to pursue its marketing objectives
in the target".Thus the marketing mix refers to four broad levels of marketing decision,
namely: product, price, promotion, and place. Marketing practice has been occurring for
millennia, but marketing theory emerged in the early twentieth century. In services
marketing, an extended marketing mix is used, typically comprising 7 Ps, made up of the
original 4 Ps extended by process, people, and physical evidence. Occasionally service
marketers will refer to 8 Ps, comprising these 7 Ps plus performance.

In the 1990s, the model of 4 Cs was introduced as a more customer-driven replacement of

the 4 Ps. There are two theories based on 4 Cs: Lauterborn's 4 Cs (consumer, cost,
communication, convenience), and Shimizu's 4 Cs (commodity, cost, communication, and
channel).

Given the valuation of customers towards potential product attributes (in any category, e.g.
product, promotion, etc.) and the attributes of the products sold by other companies, the
problem of selecting the attributes of a product to maximize the number of customers
preferring it is a computationally intractable problem.

According to Mr. Jerome McCarthy, “Marketing mix is a pack of four sets of

variables, namely product variable, price variable, promotion variable, and place
variable”.

According to Philip Kotler “Marketing Mix is the set of controllable variables that the
firm can use to influence the buyer's response”. The controllable variables in this context
refer to the 4 'P's [product, price, place (distribution) and promotion].
While doing market planning, the marketing manager of a company obtains
marketing information to assess the situation. He does the market segmentation
on the basis of such information and sets the marketing objectives to be achieved
through the satisfaction of needs and wants of the consumer population in these
market segments. For each segment of market, he formulates a marketing
programme to cater the needs of consumers. A combination of marketing methods
and activities, integrated into a marketing programme to achieve marketing goals
through satisfaction of consumer needs in a market is called marketing mix.

A marketing mix is made of four elements, namely (1) Decisions on product or

services, (2) Decisions on price, (3) Decisions on promotion and (4) Decisions on
distribution of goods and services to the place of consumer. The concept of
marketing mix was evolved by Prof. N.H.Barden of Harward Business School of
America. In his words, marketing mix refers to two things

According to Mr. Jerome McCarthy, “Marketing mix is a pack of four sets of

variables, namely product variable, price variable, promotion variable, and place
variable”.

Seven P’s of Marketing

The term Marketing Mix, popularly known as 4P’s, was given by Jerome McCarthy.
He classified the marketing mix into four heads beginning with the alphabet ‘P’,
namely (1) Product, (2) Price, (3) Promotion, (4) Place (Physical Distribution) as
shown in the following figure.

Let us discuss these 7 elements of marketing mix in detail.

(1) Product

Product is the main element of marketing. Without a product, there can be no marketing.
“A product is anything that can be offered to a market for attention, acquisition, use or
consumption that might satisfy a want or a need’’, says Philip Kotler. According to
Alderson, “Product is a bindle of utilities, consisting of various product features and
accompanying services”. A product stands for the organization’s offer to the market place.
It provides physical comfort and psychological satisfaction to the buyers. It may be both
tangible or intangible. Tangible products is one that can be seen and touched in its physical
presence. The examples are - garments, shoes, mobiles, vehicles, soaps, vegetables, etc.
Intangible product is one that cannot be seen and touched, but can be felt. It is in the form
of services.

The examples of intangible products are -education, medical care, insurance, banking,
travel and transport, holiday resorts, etc. Product is the most important element of
marketing mix. Hence, the marketing manager has to put all his efforts in framing
marketing strategies of its product offered to the market.
In doing so, all the sub-elements of product are to be considered. The sub-elements (or
variables) of product are - product design, product range, product line, product package,
product features, product quality, product branding, trade mark, labeling, after sale services
and guarantees, etc. A proper combination of these sub-elements gives a product its ability
to succeed in market.

Product strategy also covers the marketing decisions about product modification, product
simplification, removal of non-profitable products, etc.

(2) Price

Price is the value of a product expressed in monetary terms. It is the amount charged for
the product. According to Philip Kotler, “Price is the amount of money charged for a
product or service, or the sum of the values that consumers exchange for the benefits of
having or using the product or service.”

Price is the second element of marketing mix. The product has to be adequately priced.
Price is the only element that brings revenue to the business. The other elements of
marketing mix, such as product, promotion and physical distribution involve expenditure.
Hence, pricing should be done with utmost care .The factors considered while determining
the prices are target customers, price elasticity of demand, cost of production, level of
competition, government restrictions on price, if any, and social responsibility of business.

A proper pricing policy in different market conditions determines the acceptance of the
product by the customer. The sub-elements of price are - price level, pricing policies,
margin of profit, terms of credit, terms of delivery, rebates and discounts, resale price,
maintenance, etc.

A common strategy for beginning small businesses is creating a bargain pricing impression
by pricing their product lower than their competitors. Although this may boost initial sales,
low price usually equates to low quality and this may not be what customers to see in your
product.

Your pricing strategy should reflect your product’s positioning in the market and the
resulting price should cover the cost per item and the profit margin. The amount should not
project your business as timid or greedy.
Low pricing hinders your business’ growth while high pricing kicks you out of the
competition.

There are a number of pricing strategies that you can follow. Some strategies may call for
complex computation methods and others are intuitive decisions. Select a pricing strategy
that’s based on the product itself, competitive environment, customer demand, and other
products that you offer.

Cost Plus
Cost Plus is taking the production cost and adding a certain profit percentage. The resulting
amount will be the product’s price. You need to consider variable and fixed production
costs for this pricing method.

Value Based
Instead of using the production cost as your basis, you consider the customer’s perception
of the product’s value. The perception of the buyer is dependent on the product’s quality,
the company’s reputation, and healthfulness, aside from the cost factors.

Competitive
You take a survey of the pricing implemented by your competitors on a similar product
that you are trying to market and then decide whether to price your product lower, the same,
or higher. You should also monitor their prices and be able to respond to changes.

 Going rate
This pricing strategy is more common in selling environments where the
companies have little to no control of the market price. You price your product
according to the going rate of similar products

 Skimming
You introduce a high quality product, price it high, and target affluent customers.
When the market has become saturated, you then lower the price accordingly.

 Discount
Most commonly used for old product stocks or when you’re clearing up you
inventory. You take the advertised price and lower the amount. A good example is
a discount coupon.

 Loss Leader
You take the production cost and price the product even lower. The idea is to
attract your customers to your store where they can be convinced to buy your other
products.

 Psychological
You may have noticed that you rarely see pricing rounded off to the nearest whole
 number. This is a psychological pricing strategy. $5.99 looks more attractive than
$6.00 although you’re only saving a single cent.

The actual money you will receive as payment for your product can be complicated by
certain pricing factors so you may receive more or less than the advertised price. You need
to determine the following in coming up with the appropriate price:

 Payment Period
This is the length of time before you receive the payment.

 Allowance
You give part of the advertised price to the retailer in return for promotional
activities like in-store display that features your product.

 Seasonal Allowances
You lower the price of certain products ordered during low sale seasons to attract
customers to buy during non-peak times.

 Product/Services Bundles
You put in similar or dissimilar products together and sell them as a bundle at a
discounted price

 Trade Discounts
You give price discounts as payments to your distribution channels for doing tasks
like shelf stocking and warehousing.

 Price Flexibility
You let the reseller or the sales person modify the price according to an agreed
range.

 Volume Discounts
You give discounts for wholesale buyers.

 Credit Terms
You allow consumers to pay for your products at a later date.

Base your pricing strategy on the methods mentioned above to come up with the proper
price for your product. Remember that Price is the only P in the ‘Four Ps of Marketing’
that actually generates profit for you. The rest are cost incurring factors.

(3) Promotion

An excellent product with competitive price cannot achieve a desired success and
acceptance in market, unless and until its special features and benefits are
conveyed effectively to the potential consumers. Promotion does the task of
effective and persuasive communication of the product features and benefits to the
potential consumers. Promotion is a process of communication that informs
influences and persuades a potential consumer to buy the product or service. It is
the thirdessential ingredient of marketing mix.

The sub-elements of promotion are -personal selling, advertising, publicity, sales

promotion, public relations, trade fairs and exhibitions, etc. Promotion strategies
include decisions on budgets, theme, media selection, timing, proper evaluation of
the promotional effectiveness and appropriate feedback system to facilitate market
research.

Promotional Mix Methods

Types of
Explanation
Promotion

Communication through mass media, the firm will usually pay for
Advertising
this type of communication.
Types of
Explanation
Promotion

Developing a positive relationship between the organisation and

Public the media and the public. Good public relationships involves not
Relations only creating favourable publicity through the media but also
involves minimising the impact of negative situations.

Promotions designed to create a short term increase in sales.

Sales
Examples of sales promotion include money off coupons, discount
Promotion
codes and "flash sales".

Personal Sales interaction between the firm's representative and a

Selling consumer on a one to one basis.

This involves sending marketing to a named individual or

Direct Mail
organisation. Firms often buy lists of names, e-mails and postal
(post and e-
addresses for this purpose. This can be highly effective when the
mail)
direct mail recipients are within the firm's target market.

Internet Placing adverts on internet pages through programmes such as

Marketing Google's AdWords.

Firms place daily messages on social media such as Facebook and

Twitter to keep customers interested in their organisation. They
Social Media
may even run promotions, flash sales and discounts just for their
social media readers.

An organisation or event is paid to use your branding and logos.

Sponsorship is commonly used in sporting events; player's clothing
and stadiums will be covered in the firm's branding and even the
Sponsorship tournament may be named after the firm. Although effective
sponsorship requires a large audience you may get smaller firms
interested in local business sponsoring small events in their area
e.g. school fairs.

Message Strategy

Firms need to carefully consider the message that their promotion strategy will be
conveying to their target audience. What message will promotion activity send to the target
audience and how will it impact on the firm's reputation?

The promotion's message should reinforce product benefits and help the firm to develop a
positioning strategy for their products.
Media Strategy

Media strategy refers to how the organisation is going to deliver its message. What aspects
of the promotional mix will the company use to deliver their message strategy. Where will
they promote it? Clearly the company must take into account the readership and general
behaviour of their target audience before they select their media strategy. What newspapers
do their target market read? What TV programmes do they watch? Targeting through
effective media campaigns could save the company valuable financial resources.

(4) Place (Physical Distribution)

An excellent quality product, with the competitive price structure, backed up by

efficient promotional activities, will be a waste if it is not moved from the place of
production to the place of consumption at an appropriate time. The fourth element
of product mix, namely place or physical distribution does this work of carrying
products at the place of consumption at right time. Place or distribution activities
add value to the products by creating time, distance and possession utilities. It
makes the products easily available to the consumers, whenever and wherever
they want to buy. The sub-elements of place (or physical distribution) are -
channels of distribution, transportation, and warehousing and inventory control.

Thus, marketing mix is the proper combination of the above four ingredients. The
business firms use such a mix to achieve desired level or turnover in the target
market. The marketing mix should be regularly revised in order to meet the
requirements of changes in the marketing environment of the business. Changes
in the customer, preferences also call for alterations in the marketing.
Distribution strategy.

Selling Directly
Direct selling can be a good starting point, especially if the product supply is limited or
you only sell seasonal products. One advantage of selling your products directly is you get
a more personal feel of the market because you interact directly with the customers so you
can easily adapt to the changes. Another is that you control your product’s pricing and the
methods on which it should be sold. Distribution methods may include, but are not limited
to, door-to-door, retail, e-commerce, mail order, or on-site.

You need to have a retail interface with the target customers if you want to sell directly.
You can sell either electronically or in person. If this requirement will not work for you,
you might need to consider selling through a reseller or an intermediary.

Selling Through a Reseller

If you want to have wider distribution for your product, you can sell it through a third party,
either a retailer or wholesaler, who will then resell the product to their customers. This
distribution strategy also reduces the pressure of running a distribution system. Reseller
sales also reduce the storage space required for product stocks. However, you will lose
personal contact, and even company identity in some cases, with the customers since they
will be talking now to your resellers. Some resellers may request that your product be sold
under their own brand.

Intermediaries can also be specific about supply flow before they can handle your products
for reselling. They would want the product available for distribution all year round. This
can put a lot of stress on the production line, especially if you only produce seasonally. But
if you can agree to that, you might consider selling through intermediaries as your
distribution strategy.

Market Coverage
Market coverage refers to how wide or varied you want your products to be distributed.
This applies to either direct sales or through intermediaries. There are three types of market
coverage that you may want to adopt.

Intensive distribution
This ensures the widest distribution possible for your product or service. You sell your
products in as many locations or markets as possible. And oftentimes, you need to lower
your prices. This is the method most commonly used by large businesses or manufacturers
to reach customers nationwide or even globally. Examples of products effectively
distributed using this distribution strategy are convenience products or things we buy
regularly, like candy or chewing gum.

Selective distribution
You may also want to sell only to a few select businesses or customers. This is called
selective distribution and is the strategy commonly used for selling upscale products and
is sold by resellers who deal only with high-quality products. It’s easier to establish
consumer relationships using this distribution strategy as compared to intensive
distribution.

Exclusive distribution
This strategy restricts your product distribution to only one reseller. The reseller will have
exclusive rights to sell your product or service, and in return, you may also be the sole
supplier. This works more effectively with specialty products that you can promote as
prestigious because you are the sole supplier and the intermediary is the sole reseller.

(5) People

Of both target market and people directly related to the business. Thorough research is
important to discover whether there are enough people in your target market that is in
demand for certain types of products and services. The company’s employees are important
in marketing because they are the ones who deliver the service. It is important to hire and
train the right people to deliver superior service to the clients, whether they run a support
desk, customer service, copywriters, programmers…etc.

When a business finds people who genuinely believe in the products or services that the
particular business creates, it’s is highly likely that the employees will perform the best
they can.

Additionally, they’ll be more open to honest feedback about the business and input their
own thoughts and passions which can scale and grow the business.

This is a secret, “internal” competitive advantage a business can have over other
competitors which can inherently affect a business’s position in the marketplace.

(6) Process
The systems and processes of the organization affect the execution of the service.

So, you have to make sure that you have a well-tailored process in place to minimize costs.

It could be your entire sales funnel, a pay system, distribution system and other systematic
procedures and steps to ensure a working business that is running effectively.

Tweaking and enhancements can come later to “tighten up” a business to minimize costs
and maximise profits.

(7) Physical Evidence

In the service industries, there should be physical evidence that the service was delivered.
Additionally, physical evidence pertains also to how a business and it’s products are
perceived in the marketplace.

It is the physical evidence of a business’ presence and establishment. A concept of this is

branding. For example, when you think of “fast food”, you think of McDonalds.

When you think of sports, the names Nike and Adidas come to mind.

You immediately know exactly what their presence is in the marketplace, as they are
generally market leaders and have established a physical evidence as well as psychological
evidence in their marketing.

They have manipulated their consumer perception so well to the point where their brands
appear first in line when an individual is asked to broadly “name a brand” in their niche or
industry.
 Patanjali Marketing Mix

Marketing Mix of Patanjali analyses the brand/company which covers 4Ps (Product,
Price, Place, Promotion) and explains the business & marketing strategies of
Patanjali.

Patanjali 4 s
Product:
Patanjali Ayurved is an Indian FMCG company which started in 2006. Patanjali has
a diverse product offering in its marketing mix. The product range of Patanjali had
more than 400 types of FMCG goods like cosmetic products, food items, haircare,
skincare, toothcare etc. The company also has products which focus on baby
segment, healthcare and beauty products for men and women. Patanjali also
produces medicines and as per its sources, all its products are ayurvedic and free
of harmful chemicals. Patanjali food product range includes biscuits, noodles,
cornflakes etc. Patanjali has 300+ medicines for treating many ailments and body
conditions, from common cold to paralysis. Textile, jeans, kurta, pyjama etc is also
something which the company is focused on. Hence, this gives an insight in the
product mix of Patanjali.

Price:
Patanjali Ayurved has entered in an extremely competitive segment in the Indian FMCG
industry. The main players in India in this category are the likes of HUL, P&G, Marico,
ITC etc. Patanjali has ventured into various segments and hence the pricing strategy in
its marketing mix is defined by the competition in that segment. Patanjali products are
priced as per competition so that it becomes easier for the customers to switch from
their existing brand and adopt their products. Patanjali noodles competes with Maggi,
toothpaste competes with Colgate, chywanprash competes with Dabur, cornflakes
compete with Kelloggs and hence forth. This clearly shows that Patanjali has replicated
the already successful existing FMCG model and is focused on giving a healthier and
natural variant to its target audience. Thus the prices of Patanjali products are driven by
segment, geography and most importantly competition pricing.

Place:
Patanjali has managed to reach a wide population in a short span of time. Patanjali has
an excellent distribution network as it has tied up with the likes of Future group, Reliance
retail, Hypercity etc. This has enabled the Patanjali brand to ensure that its products are
widely available across various cities and towns in India. Close to 5000 retailers are
actively promoting Patanjali products along with smaller grocery stores. With the
increase in ecommerce in the Indian segment, Patanjali is also effectively increasing its
presence online. This would enable customers to simply add the products to their carts
and they can buy Patanjali products via COD, online payment etc which would be
delivered to their doorstep. The brand has also been able to expand geographically
outside India. Patanjali products are widely available in countries like Nepal, Saudi
Arabia, UAE, Middle East, Bangladesh, SriLanka etc.

Promotion:
Patanjali has considered advertising for its products as a high priority for driving sales.
The promotion and branding in Patanjali marketing mix utilises all media channels like
print, TV, online ads, billboards etc. Patanjali's brand ambassador is yoga guru Ramdev
Baba, who has a staggering fan following, which enabled the brand to catapult in the big
league within a short span. The advertisements of Patanjali has been aggressive where
they have showcased the importance of using natural and ayurvedic ways of making
products. Their advertisements have also been under scrutiny as they have alleged that
its competitors have been using harmful products. Patanjali advertisements showcase
their entire product range targeting the audience who want a healthy lifestyle by using
naturally curated products. The massive advertising exercise by Patanjali has made it one
of the fastest growing FMCG companies in India, with annual revenues in excess of INR
5000 crores. Hence this gives an overview on the marketing mix of Patanjali Ayurved
FMCG company.

CHAPTER-4
 ISSUE’S RECOMMENDATIONS

Issue 1: Stock-out

With almost 600 products scattered in multiple FMCG categories, the product portfolio
of Patanjali is large and has become inconsistent, which is causing confusion among
customers andalso shifting away from its core value proposition. For example, the
noodles or biscuit category falls neither under the Ayurveda bracket nor it is an Indian
food or recipe, both of which were core to Patanjali. Also just by flooding the market
initially with the sheer volume of their numerous products, now it is posing challenge to
the company to maintain demand-supply, to avoid stock-out of best-selling products &
clearing the less selling products.

Recommendation

Patanjali should cut off manufacturing or marketing the products which are not aligned
with their core value of providing Ayurvedic products which has health benefits. By this,
they can retain and strengthen their position as the market leader in Ayurveda and herbal
products. Also by this process, they will have a smaller portfolio than present, which will
enable them to divert all these resources into those products. Quality will enhance
significantly, packaging can be improved & steady demand-supply can be maintained
as a result along with many other possibilities.

Issue 2: Fill rate and sporadic supply

The supply & distribution of Patanjali is inadequate & sporadic. Many a times, there is
more supply than required and at times, there is very low supply. According to one
source, the fill rates of Patanjali products are in the range of 40-50 per cent. On the other
hand, multinational consumer goods companies such as Nestlé and HUL have a fill rate
of 85-90 per cent. Thedistributor margins are as low as 5% compare to 8-10% as offered
by other FMCG companies. Most of Patanjali products are hence sold on MRP owing to
very low margins.

Recommendation – Cutting down the existing SKU to a reasonable number will

help Patanjali gain traction as they can optimize on the supply demand and give a
little more margin to the distributors & retailers. In the second phase, we
recommend increasing the production capacity by increasing the number of
production units. As a result, they can leverage economies of scale and hence work
on the adequate & timely supply as well as give a better margin to the distributors
& retailers. In the light of this, it should consider setting up production plants in
South India to enter more aggressively in this market. Overall, a hub-and-spoke
model would be beneficial for a smooth Pan-India distribution. Also, careful
selection of distributors is recommended who understand their local supply-
demand well. To increase reach, it should be available in local kirana stores too.

Issue 3: Outsourcing

Outsourcing & quality has always been a concern for Patanjali. Many of its products
like biscuits, corn flakes etc. are outsourced to other companies, only the marketing
& final product is rolled out under Patanjali brand. This has raised questions over
the Ayurveda offering of those products as well as the quality. Instances have been
found where insects, fungus were found in its packaged products, products are
stocked with a future manufacturing date etc. All these is causing a trouble to the
brand. Though Ramdev wants customers to believe that this is some sort of
conspiracy by the MNCs, in the long run it won’t help.

Recommendation – It is observed that manufacturing of only those products are

outsourced which is not a core offering of Patanjali nor align with its values like the
biscuits and cornflakes. Hence Patanjali should really consider moving out from
such categories. As a result, they can keep the quality of their core offerings intact
which are mostly manufactured in-house. Also, since by this process they are
cutting short their portfolio, they can focus more on the quality of the present
products. Over top of this, they should still implement stringent quality check and
assurance process. This can be done by periodic industry standard quality testing
& publishing the results in public.

Issue 4: Advertising spend vs low prices

With a high ambition of directly taking on the MNCs, of lately Patanjali has started
spending a bomb on their advertising & promotion. Only in the first two quarters of the
current fiscal year, it is estimated that Patanjali has spent around Rs 360 crore, which is
around 7% of FY2015 sales revenue of Rs 5000 crore, while the operating margin was
around 23%. Naturally, this will put pressure to increase the price.

Recommendation – Since the company is in its growth phase, it is natural that it

will have ambitious plans ahead. We recommend that in the light of such plans, it
should always think in the long term and do not suddenly increase the price of its
products since most of customers are still in adoption stage and diffusion needs
time. Increasing the price to bear the cost of promotions and other activities may
prove fatal to the company and the customers may switch back to the commonly
available FMCG goods.
Issue 5: Hindi packaging vs South India sales

Most of the package and promotion are in Hindi only, with few instances where
English is used alongside Hindi. While it isunderstandable that Patanjali wanted to
evoke a Swadeshi feeling and also started mainly catering to North India, now that
it has its presence in South India, it is creating an issue among customers. Many a
times, a customer gets discouraged from purchasing a Patanjali product since he
does not understand Hindi script about what is written on the pack or what is in
the promotional poster. Overall, it hinders the adoption and diffusion in South India
particularly.

Recommendation – We recommend that it is high time that Patanjali considered

using vernacular language of respective states of South India in both their
promotion and packages there. This will result in a greater connect between the
brand and the customer, which is expected to result in the increase of sales of
Patanjali products.

Issue 6: Unfocussed product launch

Following a strategy of increasing market share, Patanjali has flooded the market
with its huge variety of products, which are launched very frequently and in very
short duration between two launches. This huge array of product line often
confuses the customer and also deviates the company from its original value
offering of Ayurveda products. Few products sell well, while some products take a
long time to clear the shelf since the customer might find a better alternative.

Recommendation – It is already recommended previously that Patanjali should

cut down the product lines which are not aligned with its core offering. Apart from
that, Patanjali should consider going for a trial version with samples in a
smalllocality. If the product clicks, then only they should go for mass production
scale for that product.

Issue 7: Over-reliance on Ramdev

Since Ramdev is at the heart of the brand, any attack on the personality of the
individual is like a direct blow to the brand itself. Time and again, Ramdev did come
on the limelight for various reasons like using his influence and political tie-ups to
get cheap lands and other incentives. This creates an adverse effect on the Patanjali
brand itself.

Recommendation – It is true that without Ramdev, the success story of Patanjali

might be different. But still with concern with the above issue, Patanjali should start
linking the product quality and features and other related stuff in their promotion
than depending on Ramdev alone.

Conclusion

Baba Ramdev’s Patanjali has made disruptive progress in the FMCG sector. Within
a span of less than 10 years, it has displaced ayurvedic market leaders like Emami
and Himalaya. Patanjali has become synonymous with ayurvedic products. While
the total demand is not being satisfied as of now, efforts are on to increase sourcing
so as to maintain steady supply of raw materials. The fill rate is 45-50% and can
only increase from now on. They have increased their margins for franchise stores
as well as retail chains to around 10% and thus are getting better placement on the
shelves. They are focused on serving the masses and thus cut corners in packaging
and advertising. This is changing as they spendingon advertising recently. The radio
campaign is the first proof of that. Ramdev Baba’s charisma has pushed Patanjali to
grow over 10 times in a span of less than 10 years. The FMCG giants are also taking
steps to check the advancements of Patanjali. However now that it has gained
traction in the market and there is overwhelming demand for its products, it will be
difficult for them to win back their lost market shares.