CONSUMER BEHAVIOUR

ASSIGNMENT| SUBMISSON 3

BY: AYUSHI JAIN | DM18216

Analyse the Rise of Patanjali Ayurveda

1 INTRODUCTION
“We don’t know markets or marketing…but what we know is serving the people by
providing them high-quality products at attractive prices.” – Acharya Balkrishna, MD,
Patanjali Ayurveda Ltd.

A few years back, analysts and leading FMCG giants must have simply ignored the above
statement by Acharya Balkrishna, but in the recent years, the meteoric rise of Patanjali
Ayurveda has created a serious threat for most of the giants in this sector.

Started as a small pharmacy in Haridwar in 2006, Patanjali Ayurveda has turned into an
Indian FMCG company with current market evaluation of $2 billion. The company has
shown tremendous YOY growth in past 5 years and has set a tough benchmark for its
competitors. As per the company financials, Patanjali Ayurveda shares the same space with
MNC’s like Nestle, Britannia, Colgate, P&G, ITC etc.

Patanjali can be considered as an underdog but its rapidly catching up against the Top dogs
in the FMCG sector.

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1 THE BUILDING OF BRAND “PATANJALI”
 Divya Yog Mandir Trust
Divya Yog Mandir trust was established in 1995 with the whole and sole mission of
putting Yoga and Ayurveda on the world map. With the mission of popularising Yoga,
Baba Ramdev started organising small camps and Yog Shivirs in different parts of the
country.

 Collaborations with TV Channels

Baba Ramdev also utilised TV channels like Astha & Sanskar to touch the lives of
millions of people through his Yoga Shivirs. In his live telecasts of programs titled “Divya
Yog”, Baba strongly opposed the MNC’s established in India and tried to foster patriotism
among his followers through his speeches. He motivated them to produce the products in
India and consume the products made in India only. The live streaming’s of Yog Shivirs
played a key role in building the brand “Patanjali”.

 The Patanjali Yogpeeth Trust

It was established in 2006 with an objective of spreading awareness of Yoga. The

objective included helping economically weaker sections of the society by facilitating
them with free treatment of various diseases and to establish an advanced cutting edge
R&D centre in Ayurveda.

 Patanjali Ayurveda Limited

Later in 2006, Patanjali Ayurveda Limited was co-founded by Baba Ramdev and Acharya
Balkrishna with a mission to propagate the power and science of Ayurveda. In 2012, the
founders decided to expand the power of Patanjali Ayurveda in the mainstream Indian
Retail sectors. The products offered by PAL is a perfect blend of ancient wisdom and
latest technologies. Though Acharya Balkrishna holds 92% stakes, the core driving force
behind PAL success is the charisma and philosophy of Yog Guru Baba Ramdev.

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 Other Institutions
There were a number of institutions established by Divya Mandir Yog Trust which
contributed significantly in the success of Patanjali Ayurveda. These institutions provided
manpower, Raw materials & technological know-how for the smooth operations of PAL.
Some of these institutions are:
 Patanjali Ayurveda College
 Patanjali Chikitsalaya
 Yoga Gram
 Goshala
 Patanjali Herbal Botanical Garden
 Organic agricultural farm
 Patanjali Food and Herbal Park Ltd.

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2 PAL’S STRATEGIC MARKETING
Through its continued efforts, the co-founders of PAL established a captive market which was
based on the values of Yoga, Pranayama, Health and above all the brand of Baba Ramdev.
Patanjali has adopted both low cost and differentiated product strategy.

2.1 SEGMENTATION & TARGETING

Patanjali Ayurveda Ltd. segmented its market based on:

 Demographic – Income, Age, Gender

 Psychographic – Health conscious customers, Patriotic

Key Features of the market segment acquired by PAL was:

 Health conscious customers who preferred natural products

 All the products were “Value for Money” and were priced at 15%-30% lower than
the competition
 The products were targeted initially at lower & middle income groups, but the
products have buyers from upper middle class and higher income groups as well
 Patriotic and believes in philosophy of “Swadeshi” products
 Followers of Baba Ramdev and considers him as their Ideal

2.2 SELECTIVE SPECIALISATION MARKETING STRATEGY

 PAL follows selective specialisation strategy as they have products which can cater to
lot of segments but not the entire market

Segments---> Income Health Consciousness Patriotism

PAL's Product
Categories Low Medium High Low Medium High Low Medium High
Home Care      
Cosmetics & Health      
Food & Beverages      

Health Drinks      

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2.3 PATANJALI POSITIONING STRATEGY

 With its brand slogan “Prakriti Ka Aashirwaad”, the company positioned itself as a
provider of “Natural products at affordable prices”. As per cognitive learning
theory, the tagline enhances the encoding aspect as makes it easier for the consumers
to connect the product to its core value of being natural and healthy.
 With the Make in India movement campaign, the company has well established itself
as a “Swadeshi Make” company

Both the positioning strategies have worked extremely well for the company.

3 KEY SUCCESS FACTORS FOR PATANJALI AYURVEDA

3.1 LOWER LEAD TIMES

Patanjali Ayurveda’s research and development team has been able to deliver quality products
in lesser time along with lower costs. The lead time is very short between the product concept
and product launch. The lead time between Patanjali Noodles product concept and the
product launch was just 4 months.

3.2 DISTRIBUTION CHANNELS

Patanjali Ayurveda Ltd. has multiple distribution channels across the country. It has a reach of
approximately 0.2 million outlets. Through its 1200 chikitsalaya, 7000 stores, 2500 arogya
kendras, Patanjali has established a strong presence in the market. Patanjali has also tied up
with modern retail chains like Reliance & Future Group which carries Patanjali’s products in
their retail outlets. To increase its reach in Urban areas, Patanjali has collaborated with Star
Bazar (Tata Group), More (Aditya Birla), D-Mart, Spencer Retail, Apollo Pharmacy etc.
Going with the trend, Patanjali has also ventured in e-commerce trade through its portal
patanjaliayurveda.net.

3.3 LOWER PRICING

Patanjali products are priced at 15%-30% lower than the competition. Patanjali follows
market penetration pricing strategy. Patanjali products are giving a tough fight to all the
leading FMCG players. Colgate is one of the examples which is impacted badly by Patanjali
“Dant Kranti”. Colgate has reported lowest revenue growth in the past 4 years. The lower

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prices facilitated the switching of customers from HUL or P&G’s products to Patanjali’s
products.

Price Comparison of Patanjali products with its close competitors:

Product Name Quantity Patanjali Price Competitor’s Competitor

Price
Cow Ghee 1Ltr Rs. 450 Rs. 710 Parsi Dairy
Saundarya Face 60gm Rs. 60 Rs. 80 Pears Face Wash
Wash

Honey 500gm Rs. 135 Rs. 199 Dabur Honey

Alovera Gel 150 ml Rs. 75 Rs. 518.64 Forever Living
Tejas Anti-Wrinkle 50 gm Rs. 150 Rs. 248 Garnier Anti-Ageing
Cream Wrinkle Cream

Aarogya Apple 200 ml Rs. 14 Rs. 22 Tropicana

Juice
Herbal Hand Wash 250 ml Rs. 55 Rs. 61 Life Boy Hand Wash
Dant Kranti Tooth 100gm Rs. 35 Rs. 45 Colgate
Paste
Tejas Body Lotion 100ml Rs. 60 Rs. 132 Nivea Body Lotion
Crack Heal Cream 50gm Rs. 60 Rs. 100 Crack Heal care
Cream
Somya Haldi 75gm Rs. 12 Rs. 14 Hamam
Chandan
Ujjawal Detergent 1Kg Rs. 58 Rs. 159 Surf Excel Powder
Powder
Patanjali Balm 25gm Rs. 40 Rs. 52 Tiger Balm
Toothbrush 1 Rs. 8 Rs. 20 Colgate
Kanti Alovera Soap 75gm Rs. 13 Rs. 20 Vivel
Mix Fruit Jam 500gm Rs. 70 Rs. 99 Kissan Jam
Aarogya Biscuit 100gm Rs. 10 Rs. 20 Britannia Gooday
Choco Chips
Aarogya Aata 10Kg Rs. 200 Rs. 310 Aashirwad Aata
Patanjali Salt 1Kg Rs. 10 Rs. 14 Aashirwad Salt
Patanjali 500gm Rs. 145 Rs. 182 Kellog’s Corn
Cornflakes Mix Flakes-Original

Above price ranges clearly indicates that Patanjali has strategically priced its products way
lower than its close competitors in all the product categories.

3.4 PROMOTION STRATEGIES

Patanjali Ayurveda has used various platforms and techniques to promote its products.

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 Yoga Shivirs
Along with various Yoga postures, Baba Ramdev also talks about Patanjali Ayurveda
products in his Yog Shivir which can provide a healthy life. This is one of the most
unique and efficient promotional strategy.
 Word of Mouth Publicity
Through his continued efforts over the years, Baba Ramdev has created a community
of his followers and loyalists who speaks very high of Patanjali Products.
 Advertising & Digital Media
PAL has increased its investment in advertisement and digital media. Patanjali has a
presence on social media through its Facebook Page and Twitter Handel. The
company also has a channel on Youtube which features various videos on benefits of
Yoga & Patanjali products. It has also launched various TV commercials.
They also made use of moderate Fear Appeal to increase customer involvement.
Taking advantage of Maggi’s controversy, Patanjali marketed its noodles as “Cook
Quickly and consume without fear”. They used the central route of processing to
educate its consumers that their noodles didn’t have any harmful ingredients like lead
or monosodium glutamate. This has helped consumers to trust the product and attain
Top of mind awareness (TOMA)
Patanjali is also using peripheral cues by using celebrities like Hema Malini and
Sushil Kumar for product endorsements.
 Books & CD’s
There are various books and CD’s available in the market which contains information
and benefits of Patanjali Products
 Promotion in Reality TV Shows
Nowadays, Baba Ramdev is seen on the sets of various reality shows like “Nach
Baliye”, “Sabse Bada Kalakaar”, “Comedy Nights with Kapil” etc. where he is seen
promoting his products by giving hampers of Patanjali products to contestants.

 BABA as the Brand Ambassador (Peripheral Route)

Baba Ramdev is a recognised face and is a public figure with huge fan following.
Baba Ramdev’s association with Patanjali is the major driving force behind its
success. Baba is considered as a veteran of Yoga and is strongly associated with
Ayurveda. This adds to the products perception and brand image and brand equity.

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3.5 FOCUS ON QUALITY
Quality is of prime importance in FMCG space. Patanjali has maintained superior standards
of quality for all its products. Patanjali products are effective and consumers rank them at par
with the leading FMCG brands. As Patanjali goods are mostly experience goods, hence
customers gain satisfaction only after trying and experiencing the product.

3.6 PRODUCT EXPERIMENTATION & INNOVATION

Patanjali through its continuous innovation and experimentation has created a strong market
presence in midst of strong competitors. The company has more than 700 products under four
major verticals namely Food, Cosmetics, Home Care, and beverages.

3.7 CULTURAL APPEAL

In the light of Swadeshi Campaign, Patanjali is marketed as a brand which is extremely
Indian. This kind of affect appeal was successful in establishing an emotional connect with
consumers. The company advertises its products being completely natural and without any
synthetic or artificial ingredients. Patanjali made use of the existing belief (Fishbein Model)
of “Natural is Healthy” to change the attitude of the customers.

Using the tradition and culture as a weapon, Patanjali is able to impart knowledge to the
customer on the product reliability and credibility.

By above methods Patanjali has been successfully able to disrupt the agenda of the common
man by teaching him that the Ayurvedic herbal products are good and safe and chemicals are
bad.

4 PATANJALI ASSOCIATION MAP

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Patanjali brand association map explains that customer’s perception towards the brand is built
around satisfactory values and benefits that he derives after he has paid for the product and
enjoyed the benefits he/she was looking for. Patanjali products are utilitarian products and
hence the involvement is not that high. Being utilitarian, the price plays a salient role in
driving brand loyalty.

5 PATANJALI’S DIFFUSION DRIVERS ANALYSIS

Factors Rating

Relative Advantage High

Compatibility High

Observability Low

Triability Moderate
 Complexity Low Indians society is
increasingly becoming
health conscious. No. of people hitting Gyms and favouring organic products is

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 increasing rapidly. The natural and herbal products were always associated with
Indian culture. Therefore, Patanjali’s relative advantage and compatibility is high.
 As Patanjali products are mostly food items and personal care products, hence
observability is low
 Triability is moderate as Patanjali products are available in easy to use packs but still
not higher because the products are not available on all the small or local retail stores.
 The product complexity is lower because Patanjali produces same product categories
which are already present in the market and are easily consumed by the customers

6 SWOT ANALYSIS

WEAKNESS
STRENGTHS - Lower presence in traditional retail stores
- Captive Market - Large part of revenue is generated by few
-Lower production costs products
-Good Political connections -Huge dependency on Baba Ramdev
-Collaborations with modern retail chains - Lack of awareness in southern regions
-Diferentiated products
-Baba Ramdev's strong public image
SWOT

OPPORTUNITY
-Large Untapped Market
-Opportunity for exports
-Opportunity to utilise favourable
government policies towards Ayurveda
THREAT
- Leading FMCG giants like P&G, HUL etc.
- Issues with FSSAI
- Allegations by experts on the ayurvedic
aspect
- Controversies with Advertising Standards
council regarding misleading advertisements

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7 PORTERS FIVE FORCES

Threat of New Entrants Bargain Power of Buyers

(HIGH) (Moderate)

Industry Rivalry
(HIGH)

Threat of Substitutes Bargain Power of Suppliers

(Moderate) (High)

 Industry Rivalry is high since there is intense competition in the market. Leading
FMCG players like Dabur, P&G, HUL, ITC, Himalaya etc. have strong brand
presence and extensive distribution networks. Their products have gained shelf space
in almost all the modern and traditional retail chains. Also, these companies have
huge customer base which has been loyal to them over a prolonged period. Also, there
are various other ayurvedic centres which provides similar products.
 Threat of new entrants is moderate as the FMCG sectors requires lot of investment.
This segment is capital intensive and hence only strong players can enter the market.
 Bargain Power of Buyers is moderate as they are looking for reliable products at
affordable price and quality. If they get similar products which are at lower prices but
meet the quality standards then they can make a switch.
 Threat of substitutes is low to moderate as the substitutes are category specific and
this segment of Ayurvedic products donot have high substitutes
 Bargain power of supplier is moderate to high as the business is dependent upon the
right quality ingredients. Patanjali has controlled the bargain power of suppliers by
establishing its own herbal gardens and hence becoming a fully integrated
organisation.

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8 WHAT CAN DERAIL PATANJALI ?
According to the experts in the Indian FMCG sector, growth of Patanjali will not be forever
and company will not be able to keep up the pace in the longer run.

Patanjali was successful in penetrating the market by addressing the latent need of herbal
products in the market. But, this newer segment has now opened up the gates for the current
market leaders like HUL, P&G, Dabur etc. These players have a wide customer base and
have extensive distribution networks. It will not take time for these players to launch their
products which can easily compete with Patanjali’s value proposition.

Patanjali is still operating through either its own stores, or through franchisees and retail
chains. Its presence in traditional retail stores is still low. If the current market leaders comes
up with its herbal range of products, then it will be a tough time for Patanjali.

According to latest reports, Colgate has already started producing its herbal range of
toothpastes and has acquired 7% of Patanjali’s Dant Kranti’s market share as well.

Other than the leading FMCG giants, there are several other players like Naturals, Vindhya
Herbals, Pure Roots are growing in the market. Patanjali needs to carefully formulate its
strategies to compete with these emerging players.

Also, Patanjali brand has a huge dependency on Baba Ramdev and his public image. If in the
longer run, either of them gets hurt, Brand Patanjali will face sudden disruption and company
sales will be impacted.

This is also to be noted that company’s maximum revenue is generated by only few of the
major products (Ghee, Shampoo, Toothpaste & Hair Oil). If customers gets better substitutes
for these products then the company will suffer a huge setback.

The recent controversies and tuffs with FSSAI was not a good sign for the company. There
have been reports of some cases filed against Patanjali by Advertising Standards Council of
India with regards to the inappropriate and misleading advertisements by the company. If the
controversies continues, then this can impact the growth of Patanjali.

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9 RECOMMENDATIONS
 There is an urgent need for Patanjali to strengthen its distribution networks and
penetrate in traditional retail market. Similar to the collaborations with Future Group
and Reliance, Patanjali can tie up with other modern retail chains as well to increase
its presence.
 Patanjali’s core attribute if high product quality and lower price. To remain
competitive and relevant, company needs to maintain its standard of quality along
with efficient pricing.
 Innovation is the key to sustain in the market. To remain relevant in the FMCG
sector, Patanjali needs to constantly innovate and come up with new products which
can cater to the latent needs to herbal products in the Indian market.
 Patanjali also needs to build more production units to cater to the rising demand for
its products
 Invest more in marketing and building brand awareness and create more of slice of
life based advertisements
 In the near future, company should not try to reposition itself as it will then result in
the dilution of brand image
 Being an underdog, Patanjali should encourage the learning process and differentiate
its products based on utilitarian attributes.
 Marketing strategy should be designed in such a way which can aid top down
processing

10 CONCLUSION
In the recent years, Patanjali has embarked commendable success by tapping the latent need
to the Indian consumers and making them aware of the power and benefits of Ayurveda. It
has disrupted the FMCG sector and has given a tough time to leading giants in the Industry.
By being prototypical through its unique value proposition and adding a hedonic attribute
of being herbal and of Indian origin, the company has attracted large customer base. Patanjali
is a good example of classical conditioning where Baba Ramdev’s image truly matched the
core value proposition of the company. The growth so far has been commendable but it is
predicted that the same is not going to last for a longer period. Hence, to sustain in the
market, company needs to redefine and reformulate its strategies as per the market conditions
and trends.

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11 REFERENCES

1. http://library.pes.edu/opac/Casestudy.pdf
2. http://www.business-standard.com/article/companies/fmcg-players-shift-gears-to-
take-on-patanjali-116062800909_1.html
3. http://www.business-standard.com/article/companies/dabur-notes-consumer-
preference-for-ayurveda-herbal-products-116062801149_1.html
4. http://economictimes.indiatimes.com/et-now/experts/Experts-speak-Patanjali-
catching-up-with-listed-cos/videoshow/53628920.cms
5. http://www.patanjaliayurved.org/about.html
6. http://www.outlookindia.com/magazine/story/the-big-baba-bazaar/295984
7. https://en.wikipedia.org/wiki/Patanjali_Ayurved
8. http://www.thefrustratedindian.com/2016/01/rise-of-patanjali-the-untold-story-of-a-
hindu-baba-taking-on-mncs/

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