Lakshmi Bhramara Mutte

AP21111200002

BSc CS

CB: Analyse the raise of Patanjali

Introduction:

It was 1995, when Baba Ramdev, along with Acharya Balkrishna started a small sized

ayurvedic pharmacy at Haridwar named Divya Pharmacy. In the initial days, they used to

distribute the medicines for free. From procuring the raw materials to the preparation of the

medicines everything used to be done by the duo themselves. They didn’t even have the

money to register Divya Pharmacy. With such humble beginnings, this duo went on to

become the founder of one of the prominent FMCG brands in India which even clocked a

revenue of around 10,000 Crore rupees in the year 2016-17. But how did that happen?

So, this dates to the early 2000s, when Baba Ramdev’s popularity was slowly growing, and

things changed completely when he got a chance to start a yoga programme with a popular

television channel - Aastha. And in no time, Baba Ramdev became a household name & his

popularity grew immensely. In around 2006, the duo - Acharya Balkrishna & Baba Ramdev

started Patanjali Ayurved. But despite the presence of some prominent century old ayurvedic

& unani brands like- Baidyanath & Hamdard, how come Patanjali Ayurved became such a

success? And in less than a decade of its launch Patanjali clocked a revenue of whooping

10,000 crore rupees. The shocking thing is - After this point - Patanjali only saw its downfall

& couldn’t even cross the 10,000 crore mark again. And at this juncture, the question is - how

come such a promising brand degraded & failed to grow? And what even more interesting is

that recently Baba Ramdev claimed that in the next 5 years ie, by 2027, Patanjali would
become the No.1 FMCG brand in India, so by this can we expect that Patanjali had made a

comeback from its past failures & is all set to disrupt the FMCG market again?

So, to start with - let’s first understand that - Despite the presence of brands like- Baidyanath,

Hamdard, how come Patanjali Ayurved became such a success? Well, the credit goes to the

clever positioning & value innovation of Patanjali. The brands like Baidyanath, Hamdard are

ayurvedic & unani pharma companies who manufacture medicines. Though Divya Pharmacy

is an ayurvedic pharma company but Patanjali Ayurved is an FMCG company which uses the

goodness of ayurveda to manufacture day to day FMCG products like toothpaste, shampoo,

soaps etc. so they’re entirely different from Baidyanath or Hamdard, but also this should be

noted that FMCG is one of the biggest sectors in India with the presence the behemoths like -

HUL, Nestle, ITC, Dabur etc. and of course it's not easy to compete with them at all. So, how

did Patanjali manage to get through?

One answer - Value Innovation.

Here at this point - Patanjali killed both the birds with one stone called Value Innovation-

Value Innovation: It's made up of two words - Value & innovation.

Here value means the benefit which the customers get for their money while innovation

means uniqueness & originality of that benefit.

And this is the secret recipe to grow a brand or business in a hypercompetitive segment. It is

called value innovation because instead of focusing on beating the competition, one can focus

on making the competition irrelevant by creating a leap in value for buyers and their

company, thereby opening altogether a new and uncontested market space. This is what

Patanjali did. Instead of getting into a cut-throat competition with the existing ayurvedic

medicines brand, Patanjali tweaked the concept a little and mixed ayurveda with FMCG

which not just helped them escape the competition from the existing ayurvedic medicines
brand but also opened an entirely new & bigger market. And at that time, the existing FMCG

brands were more or less producing the same type of products, but Patanjali’s innovative mix

of Ayurveda & technology had a potential to create a greater value. Moreover, the price of

the Patanjali’s products was way cheaper than other FMCG giants.

Thus, from a product perspective, Patanjali was all set to disrupt the market.

but how would the consumer know that your brand offers such value with such innovative

products?

Marketing Strategy:

Marketing was indeed very important specially for a new player like Patanjali.

The consumer must know the value which the brand is providing. And mostly, doing business

without marketing & advertisement is just like playing music in a deaf man’s ears.

The following are the strategies Patanjali followed:

✓ Targeted marketing Strategy

✓ Face value (Baba Ramdev)

So, on the marketing front, here comes Baba Ramdev. By that time Baba Ramdev has

become synonymous with Yoga & healthy living, and he became the brand ambassador of

Patanjali. His followers had a huge trust in him. Thus, association of Patanjali with Baba

Ramdev gave people a perception of swadeshi, organic, healthy & pure products from the

brand and, indeed the impact Baba Ramdev has created, no Bollywood celebrity or cricketer

could ever create. As a result of all these - Patanjali grew at almost 100% CAGR
continuously for 4 years in a row & in FY17, their revenue touched almost Rs.10,000 Crores,

which made Patanjali, the second largest FMCG brand in India after HUL.

Digital Marketing Strategy of Patanjali

Patanjali has a very holistic approach to its digital marketing efforts. It has several digital

campaigns that revolve around showcasing its products and reiterating how healthy and

natural the products are. With its amazing effort’s it has reached a massive following on

Instagram.

Patanjali’s approach is two thronged. It boasts such a massive array of products that all its

posts revolve around showcasing these products. Their posts try to showcase the health

benefits and ways to use these products in ordinary day cooking. With such a massive

following, Patanjali has focused a lot of its marketing efforts on converting youngsters to

appreciate it’s products.

Secondly, Patanjali uses Baba Ramdev as its brand ambassador on their posts, very

frequently. They have successfully married their healthy products with the brand image of a

yoga guru, known for curing the country of daily ailments through healthy living. With
digital marketing efforts, they have made sure this image sticks and the customers are heavily

swayed by this stratagy.

Now let us look at the advertisement campaign strategy of Patanjali and understand the

versatile way they have evolved into a health conscious FMCG company and carved a

massive market.

Patanjali Advertisement and Campaign Stratagey

A marketing campaign means using different types of media and online platforms for

promoting a product. The specific pieces of promotion they create constitute their

advertisement strategy. They have to be carefully planned as marketing campaign plays a

major role in any brand’s success or failure.

Patanjali Ayurved has done great research on their target audience and understands the

message they should put across through heir advertisements and which campaign medium is

most effective for their strategy.

We have noted the advertisements that were the most memorable, have a look:

#Swadeshi ka swabhiman

After achieving great success in the FMCG sector, Patanjali has now entered into the brand

apparel segment with its new brand named “Paridhan.

Invoking the national image of cloth weaving, Patanjali has made a move on to the textile

industry. With the rising concerns of dependence on other countries for necessities, and

combining itself with the “Make in India” trend, Patanjali has targeted the most essential

items we all need, clothing.

# Healthy India banaenge, Patanjali biscuit khaenge

Patanjali has launched its biscuit with the tagline “Healthy India banenge, Patanjali biscuit

khaenge” which means “India shall be healthy, Patanjali biscuits is what we shall eat”.

Patanjali claims that their biscuits contain zero maida, sugar, and trans fats, and are healthier

than any other biscuits. Taking a moment marketing spin at the growing obesity in the 21st

century and sugary food overload, Patanjali marketed itself as a healthy option for biscuits.

This struck a nerve with the Indian audience, especially with the 35-year-old+ customer

segment, who daily enjoy a biscuit with their teas as a lifestyle habit.

Downfall:

Then suddenly what happened after FY17, that Patanjali’s growth became quite stagnant &

started declining in the coming years. One major reason for this is –

Failure To Scale:

Scaling up a business is every entrepreneur’s dream but often it becomes a nightmare as well.

Hypergrowth is terrifying and it's most often the success which kills a great company. The

same happened with Patanjali as well. This might sound quite ironic, but Patanjali’s

hypergrowth was the reason for its failure. Patanjali’s backend technology & strategic
decisions couldn’t pace up with the hyper growth of their brand. To scale up any new

business, there are 4 things which must be done right –

✓ Right People

✓ Right Strategy

✓ Right Execution

✓ Right Finances

Patanjali stumbled badly in most of them.

To understand it better let’s first understand the brand architecture of Patanjali.

Brand Architecture:

It’s mostly the structure & organisation of the brands within an organisational entity.

And there are majorly 3 types of Brand architecture - House of Brands, Branded House &

Hybrid Model.

✓ House of brand: Under one umbrella there are plenty of independent brands. Example

– HUL, Under HUL there are several independent brands like Clinic Plus, Bru,

Closeup, Axe etc.

✓ Branded House: There are no independent brands, and all the products are branded

under the company’s name itself. Example - Patanjali - There are no independent

brands under Patanjali, all the products are marketed under one name, ie. Patanjali.

✓ Hybrid model is a mix of the above two.

The Branded House architecture which Patanjali follows has its own pros & cons. This

branding strategy reduces the marketing cost as all the products are marketed under the same

brand name. But a major con is if one of the products is not up to the mark, this hampers the

reputation of the entire company. So, the companies with branded house strategy must be

very careful with this. But unfortunately, this is where Patanjali made the mistake again.

After achieving huge success, some of its products like - Dant Kanti, Kesh Kanti, Herbal
Soaps etc were in very high demand. To scale & meet the growing demand - Patanjali

outsourced its production which resulted in quality issues ultimately hampering the overall

brand name. If the Patanjali adopted the Hybrid model or House of Brands strategy, this

might have impacted a bit lesser than it did in branded house strategy. This strategic decision

failure cost Patanjali a lot.

Another strategic failure was - Patanjali didn’t keep an eye on its competitors rather it went

on entering newer industries. HUL launched Lever Ayush, Colgate launched Vedshakti and

many more competition surfaced in this segment and instead of countering those, Patanjali

launched paridhan - its clothing arm where there was already huge competition. Even more

hilarious was - Patanjali launched Kimbho - This is a messaging app to compete with

Whatsapp and no doubt the results were disastrous. But the limit was when Patanjali

launched its own IT company in 2020 with the name Bharuwa Solutions. These probably

were the worst business expansion decisions of Patanjali.

Financial Crises:

The demonetisation & GST impacted a lot. Patanjali’s technology backend was not at all

ready for the GST-related inventory & invoicing management in time & failed to develop

infrastructure & supply chain around it. Also, around all such chaos, the distribution channel

also got damaged. There was a mismatch between the products required & products sent

because of which some of the items were in excess while there was a shortage of some and by

the time product reaches the distributors, they are very close to the expiry date. Also,

Patanjali used to do all the distributor settlements in cash & demonetisation gave a blow to

this as well, which resulted in late settlements. All this damage in the supply chain & chaos

also happened because of the cash. Also, Patanjali being a Swadeshi company, rejected
foreign investments. As a result of which the company faced a financial crunch and reduced

their production which impacted the overall brand.

Conclusion:

SWOT ANAYLYSIS:

SWOT or Strength, Weakness, Opportunities and Threats Analysis is a management tool that

looks at the company’s prospects, both positive and negative.

Strengths:

✓ Right Time, Right Product

✓ Brand Ambassador

✓ Pricing Strategy

Weakness:

✓ Logistics:

✓ Declining Revenue:

✓ Lack of International Clientele

Opportunities:

✓ International Markets:

✓ Targeting the luxury market:

Patanjali till now has only focused on low priced and mass-consumed products. It can

capitalise on it’s natural and heritage driven brand to market more expensive and higher

quality products to appeal to and compete against better products.

Threats:

✓ Political Instability:
Due to the high politicisation of the brand, the company is bound to suffer political winds of

change. Investors tend to not support such organisations due to high politicisation, a change

in government and a fall of graces that can affect its performance.

✓ Whistle-Blowers:

There have been reports of degrading quality of the Patanjali products. Though not

sustainable in evidence, such rumours can over time erode even the best of brand images.

✓ Increasing competition

But the question is - Is Patanjali all set to make a comeback?

Well from what we can see now is that probably Patanjali has realised its mistakes before

it's too late. It has now shifted all its focus to strengthen & restructure the supply chain and

focusing on growing its existing brands rather than new launches. Moreover, it is also trying

to shift itself to a hybrid model architecture. Categories like biscuits, noodles are now not

included under Patanjali Ayurved and being classified under different groups of companies.

After all these Patanjali looks in a good shape now but still achieving the no1 position in next

5 years still seems to be out of question.