Brazilian Journal of Development 31428

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A marketing model to analyse disruptive growth- the case of Patanjali

Um modelo de marketing para analisar o crescimento disruptivo - o

caso de Patanjali
DOI:10.34117/bjdv9n12-059

Recebimento dos originais: 17/11/2023

Aceitação para publicação: 18/12/2023

Harsh Chandra
MBA from IIM Indore
Institution: Crisil House, India
Address: Powai, Mumbai
E-mail: harshchandra1996@[Link]

Abhinav Aakash
MBA from IIM Indore
Institution: Government of India
Address: Delhi, India
E-mail: i14abhinava@[Link]

ABSTRACT
Patanjali Ayurveda Ltd. conceived itself as an ayurvedic medicinal firm. However, over
time it grew diversifying itself into an FMCG firm that started disrupting the consumer
space. With increasing sales, it has surpassed FMCG locals like Emami and Jyothy
Laboratories (producers of Ujaala) who took decades to set their feet in the FMCG sector.
A look into the marketing strategies adopted by Patanjali reveals its unique features and
the latent opportunities it exploited when it had its chance. Though it is claimed there is
no business model at play, the firm ‘thinks’ and acts in such a way that even market
analysts are amazed by its rapid growth.

Keywords: baba ramdev, competitive marketing, FMCG market entry, lessons in market
entry, market disruption, PAL.

RESUMO
Patanjali Ayurveda Ltd. concebeu-se como uma empresa medicinal ayurvédica. No
entanto, com o tempo, cresceu diversificando-se em uma empresa de FMCG que começou
a perturbar o espaço do consumidor. Com o aumento das vendas, superou os moradores
locais da FMCG, como Emami e Jyothy Laboratories (produtores de Ujaala) que levaram
décadas para colocar os pés no setor de FMCG. Um olhar sobre as estratégias de
marketing adotadas por Patanjali revela suas características únicas e as oportunidades
latentes que ele explorou quando teve sua chance. Embora seja afirmado que não há
modelo de negócio em jogo, a empresa "pensa" e age de tal forma que até mesmo os
analistas de mercado ficam espantados com o seu rápido crescimento.

Palavras-chave: baba ramdev, marketing competitivo, entrada no mercado de FMCG,

lições de entrada no mercado, perturbação do mercado, PAL.

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1 ABOUT PATANJALI AYURVED LTD

Patanjali Ayurveda Ltd. (PAL) is an Indian FMCG firm that entered the FMCG
market in 2006 with the object of establishing Ayurveda and traditional sciences to
today’s technology. However, it has come under the scope of analysts far recently as they
see PAL, an unlisted firm, curbing the market share for FMCG giants like Unilever, P&G,
Nestle etc.
Though they may not pose any threat to existence of such firms but all the
strategies adopted by PAL are under close scrutiny by its competitors. Its major stake is
held by Acharya Balkrishna who claims that they don’t have any business/marketing
model to vouch its success upon. The success is just because of its vision and inherent
acceptance by people. Patanjali’s sales graph is soaring upwards, registering a sales of
Rs.1200 Crores in 2013-2014, Rs.2000 Crores in 2014-2015 and a Rs.5000 Crores in
[9]
2015-2016. Such claims have been clearly been rejected by market analysts who
propose that there is an elaborate marketing model under the table.

2 ABOUT THIS RESEARCH PAPER

This research paper focuses on the innovative marketing strategies adopted by
PAL and aspects wherein such market disruption may be explained. The paper uses
various marketing tools to analyse the significance and impact of PAL and the level of
congruence its strategy follows with that already established in theory.
The paper moves from describing the various marketing elements required in
marketing arena of FMCG companies to seeing whether the disruption is a significant one
on not. There is presentation of secondary as well as primary data to elucidate and support
the argument.

3 THE FMCG MARKET IN INDIA

Consumer Preference: India is a market of diverse consumer preferences. It has
lot of income inequality but it is essentially a developing nation. As the income grows,
people seek for better quality product. The tag of Swadeshi and indigenous produce has
been carried over many generations and is a part of our Indian heritage. Moreover, the
tag of cheaper but better is appealing to the psychological perspective held by the people.
The primary and secondary data confirm that the shift is due to a mix of these factors-
they want healthy lifestyle for them and their family. This is one important feature that

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the family members have more or less overlapping baskets- people use the products what
other members use.
Distribution: Distribution through “key” distributors: The marketing distribution
channel is segment-specific. In the rural segment kirana stores are the main distribution
muscle- with line of retailers and wholesalers. In the urban areas, there are malls, modern
retail stores, kiranas and e-commerce. Kirana stores form around 90% of the FMCG sales
outlet pie. [15]
Marketing and Branding: Marketing and branding are crucial, as brand
perception is a key factor in consumer purchases. Consumers in these markets have high
aspirations. Consumers are brand conscious and willing to pay slight premiums for
quality products, especially edible products. Consumers associate brands with product
quality. Generating brand awareness can be challenging, and apart from commonly used
media, e.g. television, traditional marketing channels such as radio, roadshows, billboards
and street plays play an important role in reaching out to the end consumer. [36]
Competition: Presence of well-established international FMCGs is the main
competition. Local business houses have been present in these markets for a long time,
and own some very popular local brands.
Market Entry: Hub-and-spoke model is mainly used in the FMCG sector. The
basic barrier is the existence of well settled giants in the segment. Thus a direct attack
may be quite useless. Instead product modification and innovation may serve the purpose.
This requires catering the unserved segments or niche marketing and then expanding on
brand trust. Any attempts to capture already served segments may be futile.

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4 COMPETITOR INTELLIGENCE

Frontier 1 Competitors- HUL, P&G, Colgate, L’Oreal

Source: Authors compilation of market data

Frontier 2 Competitors- ITC, Dabur, Himalaya, Emami

Source: Authors compilation of market data

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5 PAL AND THE 4P MARKETING APPROACH

Figure 1 Marketing Mix: The 4Ps approach

Product Pricing

Position Promotion

Source: Author’s representation on Jerome McCarthy’s “Basic Marketing: A Managerial Approach”

(1960)

An analysis of PALs’ moves suggest that it has used all the approaches in the 4P
Matrix. We shall discuss in detail strategies entailing each resource and its implications.
1. Product: One of the ultimate USP of PAL is the assurance in the
quality of its products. It puts forward the keywords of ‘materialised spiritualism’
and ‘healthy alternate lifestyle’ and it seems to be appealing as far as the consumer
segment is concerned. Even the advertising is cut short and straight. It has no
‘noise’ or elements except product specification. The main focus is to deliver
value and fulfil the claims (which can be seen in the case of Ghee and toothpaste).
[1]

It relies much upon the ‘Swadeshi’ tag and ‘Natural Ayurvedic’ image which has
been a part of Indian heritage since times immemorial. This may be a cause for natural
acceptance of the product itself. Companies like Dabur and Emami, though Indian, have
failed to register such growths. Perhaps this is because of their failure to use the Swadeshi
tag effectively. [13]
The product entry of PAL in FMCG markets despite the presence of giants is
explained through its innovation in its products. This makes it possible for disruption in
consumer space at any point of time as there are new features that cannot be replicated.
[1]
This has resulted in high penetration and ‘inartificial’ soaring of consumer demand a
clear example of an indirect attack on unserved market segments. The consumer demand
has not been inflated by brand loyalty and fancy claims but was first brought into a niche
and then expanded upon by the experience (word-of-usage propagation).
In order to have better consumer trust, there is a system of transparency and all
the quality reports for its products are available on its website. Much care is taken into
consideration that the product efficacy is not hampered.

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The product portfolio (core business) of PAL include:

i. Breakfast Range- Cereals, Cornflakes, Milk etc.
ii. Ghee
iii. ‘Healthy’ Noodles
iv. Kesh Kanti
v. Dant Kanti
vi. Chaywanprash
According to Swanand Kelkar, despite having the market research muscle and
knowledge, the existing FMCG companies have failed to cater to the drift in consumer
preferences and as such a market remains uncaptured. PAL has just been responding to
the changes in the demand and have been expanding upon it. An instance of this is Colgate
losing 2.3% market share in toothpastes due to changing rural demand patterns. [21]
As we shall see in the pricing section, most of the products are coupled with
‘cheaper’ tags. But ultimately it is the quality that Patanjali vouches why people buy its
products. One such example is that of Ghee where the product is priced over the other
market rates and is sold at premium In fact its biggest seller is ghee, which contributes
30-35% to its revenue. [35] PAL is to clock double digit market share in 10 of the 25
product categories including Ghee (33%) and Chyawanprasha (30%). IIFL reports project
the revenue only from sale of Ghee to be Rs.3100 Crore by FY 2020. [18]
PAL has also engaged in viral product launching such as Power Vita, a direct
competition to Bournvita. It wants to replicate its success with Patanjali Noodles.
Moreover, PAL’s estimate of the actual market size for FMCGs is 20000 Crores as
compared to reported 6000 Crores. [2]

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Figure 2 Key Operating Metrics of Patanjali

Source: Registrar of Companies, Patanjali, HSBC Securities and Capital Markets (India) report dated Feb
5, 2016, and UBS Securities

2. Pricing: PAL’s products are priced lower than its competitors. A quality
product that is economical is one of the main claims of the company. The company
left out brand premium during its starting years. Till 2015, advertising efforts of
PAL were minimal and almost zero. It was not extracting premium for
advertisement and was cheaper. Most reliance was on word-of-mouth and word-
of-usage. Probably, in the earlier stages it was experimenting with the product
placement and extent of acceptance of its idea by its target segment and a move
to propagate perception/demand building.
This strategy wasn’t optimal in the long run, so Patanjali increased its advertising
efforts and subsequently its prices rose. The prices are still lower. Despite this fact, it
reaps a 15% profit margin with a 20% operating profit.
This is mainly attributed to its own production line which sources products from
farmers and cuts middlemen’s cost. Moreover, the top management do not draw any
money as salary and this keeps them to scale up their operations. PAL’s administration
cost is only 2.5% of the revenue as compared to 10-15% in large companies. Moreover,

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the packaging is not that appealing in order to save costs and invest them in product
manufacture. [5][8]
Ghee is one exception to the trend. It is one of the premium products which
displays the power of ‘Swadeshi’ tag as it is most closely related to the Indian heritage.
As such people prefer to buy such products which are chemical free and natural.
However, recently, there are some facts contrary to the claims. PAL has been
outsourcing some of its products like other packaged product companies. For example,
its biscuits are made by Delhi based Sona Biscuits and juices by a bunch of companies.
This is simply an execution of division of labor and specialisation. It is better to outsource
when they can be made cheaply and concentrate resources on your other products which
you can efficiently make.
Moreover, according to IIFL reports, pricing of PAL products may not be
sustainable and we can already see positions of revising the price like that in the case of
Dant Kanti and Kesh Kanti. [18]

Figure 3 Product wise Competitor Analysis

Source: Stellarix Database

One example to quote for pricing would be Kellogg’s cornflakes whose 475gms
and 250gms pack come for Rs.91 and Rs.159 respectively. The same for PAL is Rs.85
and Rs.145 respectively.
3. Position: Pricing itself wouldn’t have worked if it were not coupled with
Ramdev's own brand positioning in yoga services, his appearances on television
with the products, and the policy of de-branding. The products claim to be
consumer centric and sacrifices on peak margins. [1]
One can find this line on PAL’s webpage: “link the rising destiny of millions of
rural masses on one hand and many more suffering and leading unhealthy lifestyle on
other hand”. It is clear that PAL’s beachhead market is rural and the urban poor market

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who want cheaper and better products. This may be linked to ‘liberalism in preferences’
which is driven by product consciousness. What PAL has tried to do is to tweak the
demand itself from lifestyle to a healthy lifestyle. In a sense, people believe there are
‘new’ products that would be better alternatives. Hence as discussed previously, we can
see the strategy of niche marketing and then expanding on the original market segment.
This is also reinforced by the Indian appeal of ‘Swadeshi’, ‘Spiritualised
materialism’ and low-priced products. Even product placement is well-planned as can be
seen in the Maggi case. The political scenario is also supportive as far as a BJP led
government promotes ‘Make in India’. MNCs fear IPR issues and PAL has already found
its way to military area canteens. All external variables seem to build a conducive
environment for PAL’s growth. But it seems more rational to see it in terms of PAL’s
adaptability and making use of opportunities it faces- firstly, the unattended changing
demand patterns; secondly, an unexplored market segment of rural and urban poor.
The franchisee model followed by PAL makes it look limited in quantity and
exclusive. The brand follows a franchisee model but up until recently it has started placing
its products at mall selling outlets like Reliance Fresh, Big Bazaar etc. but there too, the
products have a special kiosk, making it appear exclusive. [5] The partnership agreement
with Future Groups seems to be a win-win situation for both the parties. It is not a
replacement of franchisee model but a supplement for the same. E-commerce is a strong
placement position for PAL but it wouldn’t be sustainable and has to be limited as it
would take a toll on the margins. [12] Moreover, as of now not more than 1% buy its
products through Ecommerce site. [15]
The product and the brand itself seems to carry a distinct feature. There is an
element of socio-cultural integration wherein it seems that the corporate doesn’t work
‘for’ the society but ‘with’ the society and build along their ideology. This is similar to
adjusting to consumer feedback. This is not baffling the consumer with alien products,
going along their ideology and then slightly readjusting their perception. This involves
going beyond CSR and HR development.
But how does this position and placement strategies come into thought?
Companies expend around 70% of their earnings on marketing whereas up until 2015,
PAL spent only a few pennies. There is no expending on market research/survey. All
these efforts are redirected for R&D, product development and quality control. There is
assessment of demand by being surrounded with people and understanding their
sentiments, desires and needs. This establishes that a ‘personal connect’ with common

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masses leads to better trust building and firm growth. Examples of such are PAL’s
production of Amla Juice to support poor farmers who were unable to sell their Amla
crops. Then was the launch of Aloe Vera cream on suggestions by people following Baba
Ramdev during his yoga sessions.
Moreover, PAL has adopted an umbrella branding strategy to improve recall rate
and assure the customers that they are buying genuine PAL products. This is where it
defies the FMCG principle wherein the consumers search for PALs products as the
association and recall is high. This is blurred in case of P&G, HUL etc. where the product
may be known but the brand is unsought of. Thus, the brand image is being transferred to
the product and only branding and advertisement of the brand (PAL) is required and not
the individual product. This will also reduce prices and improve trust at the same time.
This coupled with brand consistency may lead to greater trust and projected brand loyalty.
4. Promotion: One of the most interesting aspects of PAL is its dramatic
promotion strategy. Up until 2015, its marketing efforts were minimal and almost
zero on advertisement. It mainly was focused on word-of-mouth and word-of-
usage built up via yoga classes. Clearly it has been using reverse marketing but
there is one unique strategy. It has been trying to network and ‘distribute’ its idea
first via yoga classes (followed by 1/6th of the population), build trust among the
target segment and then sell them the ideated products. This is somewhat an
indirect and reverse entry. One can see the strategic genius involved in the
promotion strategy. Let us elucidate the reverse entry a bit.
In order to get a non-profit lens, there has been quite a gestation period. First a
yogi guru gains reputation and there is promotion of yoga which is a part of Indian culture.
Then there is promotion of Ayurveda Vidya among the masses which is subsequently
adopted for health care purposes. There is then an element of elemental and spiritual
syncretism and there is the origin of PAL; with an already established base through the
chain described above. The gestation period of non-advertising may also be an attempt to
look for product appreciability or just an initial market push.
To remain close to the Indian society, PAL has adopted Baba Ramdev as its brand
ambassador. Here the celebrity endorsement seems to work more than fine. There is a
high connect between the endorser and features of the brand and the cultural heritage
itself. It seems to be a narrow spectrum where all the three overlap to a major extent and
it has increased the appeal and brand connect/recall.

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As discussed above, in order to gain youth appeal Ramdev seems to be

customising his promotion strategy. There is a change in the way goods are
sold/customers are viewed. One example is starting his yoga session and aasan with
Bollywood music. Basically, there is age-specific segmentation at play and PAL doesn’t
want to not use the demographic window.
Now as PAL gears up to expand its business and claims to double the revenue, it
has decided to resort to carpet bombing advertisement of its product. To enhance its
revenue, it needs demand. For the company, supply constraints doesn’t seem to be a big
deal. The advertisements after 2015 have seemed to saturate the users with the awareness
for Patanjali’s product. As was on February 2016, PAL was the biggest FMCG advertiser
according to the data set from BARC (aired 17000 times). Its commercials were played
in a large number of channels in many genres across India – both regional and national.
More than Rs.300 Crore is allocated to get a monthly viewership of 300 million. It has its
own channel- Aastha. Patanjali claims that expenditure on advertisement is only 20-30
Crores due to discounted rates on news channels. Advertisements are mainly focussed on
7 products out of a portfolio of 30 products. Patanjali has tried to increase its awareness
by targeting ‘intelligent audience’ and making it a ‘recallable brand’. It has engaged with
firms like
McCann and Mudra group for this purpose. [16] [17]

Figure 4 TV Ad-spots secured by Patanjali

Source: Broadcast Audience Research Council (India) website

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Figure 5 Patanjali TV Viewership Data

Source of images: Broadcast Audience Research Council (India) website

Brand evangelists claim that simple advertisements has helped PAL to win
customer confidence. There is only straight talk- the product and the promise. According
to Harish Bijoor Consulting, 32% of ads released by brands are tagged as ‘false’. But as
far as PAL is concerned the story is different. Moreover, the policy of debranding
followed by Ramdev, especially for MNCs, seems to be working for PAL. The brand
ambassador has been quite in news for his controversial statements but the flak has in turn
been seen as increased appeal for PAL as it seems to staunchly stand for ‘Swadeshi’ and
non-profit empowering of India.
The far-fetched advertising concept seems to be weakening. The TRA’s Brand
Trust Report suggests that PAL is among the seven most trusted Ayurveda brands in the
country. There has been some recent issues of PAL with ASCI (Advertising Standards
Council of India) regarding misleading advertisements of hair oil and other disputed ads
like the one aired on 15th August, 2016 in India. Such strategies of ‘false claims’ can
downplay its whole game if consumer expectations are broken. One more example is the
selling of Atta Noodles when it is actually a 50-50 blend of atta and maida.
Analysing all the resources of the marketing mix, we can clearly see that all the
resources have their own importance but Product and Promotion strategies are held more
important and their returns are more. This is evident from the budget allocation and the
emphasis of the brand on the same. For the product, we can see that the quality
compromise doesn’t come into question. Pricing is a follow-up to it. Promotion is another

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resource up the hierarchy where carpet bombing and saturation has been seen fairly
recently.
Figure 6 Marketing mix: The two in the 4Ps that work for Patanjali

Product

Promotion

Source: Author’s representation on Jerome McCarthy’s “Basic Marketing: A Managerial Approach”

(1960)

6 DISTRIBUTION AND RETAILING

As discussed earlier PAL follows a franchisee model. For an FMCG company to
have its own retail shops is a different proposition. The distribution muscle of PAL
increased from 150 in 2012 to 10000 in 2015. PAL chose brand outlets as best medium
to spread awareness of products from word-of-mouth and word-of-usage. But this was
not the first choice as when PAL tried to approach retailers, it was unwilling to pay shelf-
price and low margin to retailers. Thus, there was channel resistance. PAL was willing
to pay 12.5% on modern shops and 8-9% kirana shops vis-à-vis 19-20% and 12% other
firms are willing to pay.
PAL is trying to increase its retail presence through 4000 distributors, more than
10000 company owned outlets, 100 Patanjali branded stores and supermarkets. Currently,
it has 3 factories and a bunch of contract manufacturers. It expends Rs.1000 Crores on
new production units and Rs.150 Crores on research. But it won’t be able to satiate
demand unless it can distribute it. There is a huge gap in demand and supply mainly due
to lack of distribution muscle. It has 1200 chikitsalayas, 2500 Aarogya Kendra, 7000
Open stores and 5600 market vehicles. Still there is an existence of a gap.

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Figure 7 Share of major brands in Indian kirana stores (tuck shops)

Source: Industry estimates and Economics times news article; Link:

[Link]
heel/articleshow/[Link]

In order to increase its reach, PAL has invoked a partnership with the Future
Group and has been shelving its products now in mall outlets. It has also increased modern
retailer margin to 16%. Many retailers claim that although the margin is less there is
higher earnings as people plan and search to find PAL products.
One concern is that modern trade forms only form a 10% of FMCG sales pie.
PAL’s strategy of not pursuing the Kirana stores can lead to it making a loss. It needs to
have high penetration and this may prove to be a make or break point. [14][15][19]
According to Nielsen & Nielsen, availability is biggest driver of FMCG sales
(33%). 30-40% of the consumers shift to other goods if the goods they are searching for
is unavailable. This may be a trouble for PAL as the Kirana shops are currently not
stockpiling their products. PALs’ products are a thought-through buy and not an impulse
buy. But PAL has only 1/30th visibility in product shelves as compared to others.

7 CORPORATE STRUCTURE
The management space of PAL’s functioning is quite different from other such
firms. It is a live example where decision making process is speedy and portrays that
formal management structure can over sophisticate and slow down growth and product
launch disruption. The hiring structure requires that the person has similar beliefs and
vision as of PAL and doesn’t practice vices like smoking and drinking. Moreover, he is
expected to keep costs low by all means possible. For example, a sales person would be
required to take the public bus to travel for sales promotion.

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Figure 8 Oragnisation Structure of Patanjali

Source: Patanjali Ayurveda Limited Website

There is delegation and clear cut hierarchy to facilitate work specialisation. This
leads to the general chain of command system. Instead of decentralising, it has adopted a
centralisation practice with span of control. The only thing is that formalisation is only to
the extent of guidelines based on vision.

8 CRITICAL ANALYSIS AND MARKETING

Patanjali started off manufacturing bulk ayurvedic medicines later branching its
operations into FMCG markets as well. Since, the FMCG market has low entry barriers
(high competition but lot of vacuum), Patanjali soon established itself as a major
consumer goods’ manufacturer. The recent trends clearly imply that the company’s
priorities are shifting from medicines to consumer goods, perhaps because the net
revenues earned through FMCG are on par with ayurvedic medicines. This suggest that
capturing the changing demand pattern or perhaps fine tuning it in the long run direction
(as PAL did) could fetch you results.
Despite being a corporate entity, Patanjali adheres to Baba Ramdev’s consumer-
centric ideals. Therefore they focus on revenue and not on profitability. The company
achieved its targeted revenue of ~INR50‐60bn in FY16 (INR20.2bn in FY15). Even
though the thrust was not on profitability, the company managed to clock ~20% EBITDA
margin in FY15, aided by better cost management (latest machinery and strong R&D
capabilities) and lower A&P spends. Over FY12‐15, Patanjali registered revenue CAGR
of 64.7%. The company has aggressive plan to enter every consumer category (keeping
aside those that impact lifestyle and health). At the current juncture, though its presence
in many categories may not queer the pitch for other consumer goods companies (each
category not too big to impact except Ghee, which is expected to be INR12bn in FY16),
over the long term, gaining palpable distribution prowess could pose a serious threat to

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competition. In January 2016, IIFL said “Patanjali Ayurveda Ltd has, in a short span of
less than a decade, recorded a turnover higher than what several companies have managed
to achieve over several decades. There is no doubt that Patanjali is a disruptive force in
the FMCG space and is a credible threat for the incumbents.” The industrial data indicates
that the brand has a market share of 4-5%.
Patanjali boasts of a strong new products’ pipeline. The products are not only
innovative, but reasonably priced too. A central R&D facility equipped with latest
technology along with a separate new product department has helped in lining up a series
of new launches over a few months. This has been achieved by providing world-class
products at a reasonable price and pushing whatever profits they earn back into business.
An innovative R&D facility equipped with latest technology, Patanjali has also launched
a mobile app which helps the consumer to locate retail outlets and for online ordering of
Patanjali products.
Growth is being driven by the company’s largest selling product, cow’s ghee
(expected to be INR12bn in FY16) followed by Dant Kanti and Kesh Kanti. Patanjali
operates via 3 business segments, viz., foods (foods, supplements, digestives, dairy,
juices, etc), FMCG (cosmetics (shampoo, soaps, facewash), home care (detergent cakes,
powder, liquid), etc) and ayurvedic products (healthcare products for blood pressure, skin
diseases, joint pain, etc). In FY15, of the total sales of INR20.3bn, food and cosmetics
contributed INR8bn each, while healthcare products comprised the balance.
Patanjali is working on a kitchen concept, as part of which it will launch products
that will touch all categories of the SKU (stock keeping unit) used in an Indian kitchen.
For instance, the company already has products that are used in the Indian kitchen such
as dishwash bar, ghee, rice (has 3 variants of rice), pulses, spices, mustard oil, flour and
madhuram (replacement for sugar made out of jaggery) under the Patanjali brand
name. Patanjali has adopted the unique information‐ based advertising. For instance, the
company highlights the positives of cow’s ghee, which automatically helps sale of
Patanjali Ghee. In the recent past, the company’s print advertising has seen a marked
increase.
Many people complain that due to Patanjali’s weak distribution network its
products are not easily available everywhere and they are unable to buy them. To address
this concern, the company has chalked out an aggressive plan to improve its presence on
the online platform. Currently, it is already selling its products through its web‐site,

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[Link], from where consumers can order the products and get free
delivery of the same if the order value exceeds INR499.
As for reach, the company has close to 0.2mn outlets and 10,000 franchisee model
of Chikitshalyas and Arogya Kendras. . Patanjali herbal products are available at Post
Offices across the country. Distribution‐ wise, the company operates through 100 super
distributors (this will be bolstered going forward) who in turn supply to the wholesalers
and retailers (who operate through a 500‐600 strong sales team). As of now, the company
has no plans to have direct reach.
As far as manufacturing is concerned, Patanjali does 90% manufacturing in‐
house. However, going ahead to meet demand and therefore enhance capacity it is open
to even third‐party manufacturing or opening new plants. The company has zero waste
technology wherein whatever is left after usage of the raw material is further processed
for further usage. There Mega food park employs close to 10,000 personnel (from in and
around the city within a radius of 25kms). The infrastructural facilities at Patanjali
Yogpeeth includes an OPD for free medical consultation, IPD of thousand beds,
laboratory for test investigation of radiology, cardiology and pathology, a yoga research
department, free yoga classes, high quality ayurvedic medicines manufactured by Divya
pharmacy, facilities of library and reading room along with a cyber café, a huge
auditorium, apartments for senior citizens, a grand museum and a sale outlet of 11,000
square feet for literature related to yoga and Ayurveda.
Though Patanjali might not be regarded as a complete corporate set up, but the
company has been taking significant steps to professionalize the management and
incorporating the necessary processes and technology in the work culture. Patanjali is
emerging as an Employer of Choice’’ as many professionals are independently coming
forward to work with the company. During our visit and interactions we found there any
many professionals who are managing different units and have past work experience in
companies like Dabur, Shehnaz Hussain, SGH Labs, Alkem Laboratories, etc.

9 FROM THEORY TO GROUND REALITY

The primary data research of 2 mall outlets, 3 retail outlets and 50 PAL customers
yielded results which were bifurcated. Some data set were according to the allegations
and claims while the other seemed to be opposite in nature.
For instance, we found that irrespective of the claims of separate shelf space for
PAL products (as was according to the Future Group claims), the products were docked

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alongside with the competing products like any other brand. Poor visibility, no docking
or lower shelves were predominant for most of the PAL products like paste, skin care,
hair color and oil, shampoo and conditioner, noodles, biscuits, detergent etc. Only a few
of the cash cows of PAL enjoyed adequate shelf space like soaps, exclusive items (aloe
vera juice, bel candy, moosli pak, digestive goli, amla juice), honey, vinegar, ghee,
chaywanprasha etc.
The retailers claimed that the sale was more of an image and price game.
Promotion had increased sales but there were other outlets also to serve them now. The
major sources of promotion were Aastha channel and the carpet bombing advertisement.
In effect, the promotion strategy seems to be working. There is high retention and word-
of-mouth wherein the customers return back to purchase the product. An interesting point
to know that only the Swadeshi and spiritual tag is not sufficient. One retailer who
originally started the outlet for products of Shri Shri’s Art of living switched to PAL as
sales for PAL products were higher. Thus, TV promotion, branding, de-branding, fan
following of yogic classes etc. all have added to the mental space of the customer. PAL
FMCG products were also available in Patanjali Chikitsalayas and the retailer claimed
that sale of commodities was higher. This shows the acceptance and increasing market
capture for PALs products.
Majority of the customers claimed that they preferred PAL products due to its
healthy nature and it has no side-effects. As such mothers would prefer to use it for their
family. Most famous PAL products that were purchased were Dant Kanti and Ghee. Most
of them had been using PAL long ago but many shifted recently due to extensive
promotion and intrigue. Very few (about 10%) said that price was an important factor.
This could be a floor effect as people may not feel open to say that they bought it as it
was cheap. Some customers said that they bought products as there was no alternative to
it (like Bel Candy). Billboard advertisement, Aastha Channel and news channel
advertisement seemed to turn people at least to try PAL products once and then become
returning customers.

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Figure 9 BCG Matrix for Patanjali (adapted from the famous Boston Consulting Group product portfolio
matrix)

Source: Authors’ work on data taken from "Patanjali is disrupting India's consumer space". IIFL.
6 February 2016 | “Baba of all Trades”. Business Standard. 6 December 2015.

Figure 10 ANSOFF MATRIX - Patanjali

Source: Authors’ work and compilation of market data

10 SUGGESTIONS AND FUTURE MOVES

One of major drawbacks that PAL is facing now is the lagging capacity of its
distribution muscle. As stated above, entering into partnership with modern retail outlets

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may not help PAL according to the segment it targets. It needs to target kirana retailers
in order to cater to the demand it has created for its products.
Careful advertisement positioning is also required as too much of carpet bombing
of the same product can lead to a negative impact. This may be seen soon as the market
viewers has already been saturated with the advertisements.
The BCG matrix tells us as to which products it should focus and which it should
phase out (the dogs) eventually. It should focus on its core business as too much of
portfolio diversification (as of now 130 products) may lead to increased costs and lost
potential of your stars and cash cows. The Ansoff Matrix tells us that for the products
which now require product development would be needed to be shifted to market
penetrating product by extensive advertisement and improving quality. The market
leaders’ resources can be transferred hereby.
Right now it might be too early to expand at a global scale as PAL wishes to do
so as the same swadeshi card may not work over there. In the end, it might just stop at a
point where all Indian audience is reached.

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Figure 11 SWOT analysis of Patanjali

Weakness
1. Competitors with large market
Strengths share
1. Natural, ayurvedic, swadeshi 2. Low Exports
2. Brand Ambassador 'Ramdev' 3. Weak distribution muscle and
lower than potential rural reach
3. Competitive Pricing
4. Controversies, political
4. 'Make in India' and in connection, 'religious' prejudice.
accordance to socio-cultural
heritage 5. The question whether the
brand can continue on the value
added only without Baba
Ramdev also

Opportunities
1. Large unserved segment and Threats
changing demand pattern 1. FMCG giants developing
2. Untapped rural potential ayurveda products (like
3. Increasing promotion and HUL)
distribution strength 2. Riding of Swadeshi tag by
4. Competitive pricing means Dabur & Emami
more real income for later 3. Sector slowdown in later
purchase
phases as demand is inelastic
5. Increasing exports

Source: Authors’ work and compilation of market data

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