How Patanjali Ayurveda took the FMCG sector by storm

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The story of Patanjali is one of my favorites, though the brand has lost its importance today, at one point in time Patanjali literally shook the FMCG sector.

So in this blog post, we analyze what worked for the brand, and how it managed to garner all the fame that it received in such a short time!

Patanjali’s journey can be summarized with the quote given below

It takes nothing to join the crowd. It takes everything to stand alone.

- Hans F. Hansen

This is exactly what the brand did, back in the day.

It’s important to note that back in 2006 when the brand was launched, herbal or Ayurveda products were not as popular as they are today.

However, did that stop them from standing alone, and still making a mark?

Definitely not!

So let’s analyze their success through the following parameters:

1. Launch of Patanjali

2. Growth of Patanjali

3. Segmentation, Targeting & Positioning of Patanjali

4. Marketing Mix of Patanjali

5. Response of FMCG Giants

6. Key Learnings

So let’s look into each of them in detail:

1. Launch of Patanjali

It all started back in 1995 when Baba Ramdev started Divya Yog Mandir Trust with the help of Acharya Balkrishna.

This trust aimed to put Yoga and Ayurveda on the world map.

Soon a spiritual television channel Sanskar signed up Baba Ramdev for its morning Yoga program and from there the name become well known in every household.

They later established the Patanjali Yogpeeth Trust which laid the first foundation of Patanjali products and helped strengthen the brand soon.

Patanjali Ayurveda was launched in 2006 and the company rose from Rs. 450 crores in 2012 to Rs. 4345 crores in 2019.

Patanjali soon managed to become the fastest growing FMCG company in India.

It's commendable for a brand like Patanjali to become a highly profitable venture within a very short time, in an era when big FMCG giants are battling an industry-wise overall slowdown.

The objective of the company was to provide superior quality of products at fair prices and induce the Swadeshi (homegrown) feel in the minds of the consumers.

The concept of Herbal and Pure has been on a rise in India since nowadays people are more centered on keeping themselves as close to nature as possible, given their commercialized routines.

In an era where we see products from multinational companies like Hindustan Unilever, Colgate Palmolive, etc, running the race by offering similar products, we saw Patanjali offering something very different and not indulging in a similar marketing strategy as the rest.

2. Growth of Patanjali

Patanjali’s success can be best explained through Kotler’s model on Value Creation and Delivery Sequence which refers to the sum of all benefits that an organization provides to its customers less the cost which the customer incurs to get those benefits.

One of the key reasons for the success of Patanjali was the fact that they understood their consumers very well, they knew that the customer is health-conscious, is moved by the concept of Swadeshi, and also price-conscious.

Baba Ramdev being considered an ideal was an add on in regards to this.

Their only aim was now to combine all their understanding into a brand that would satisfy their consumer needs.

Initially, with the launch of their products, the followers of Baba Ramdev were the first ones to buy the products and they soon became their loyal customers.

Soon they were not just the users of the products they also started working towards the word of mouth communication, eventually, they bought a franchise of Patanjali, and soon the brand began to grow.

These franchisees along with the distribution of products also advertised and promoted PAL products in their respective regions, hence establishing brand Patanjali firmly into the mind of the local populace.

3. Segmentation, Targeting & Positioning of Patanjali

Segmentation

1. Demographic

Patanjali products across categories are segregated as per Income and Age.

Consumers in the Low and Middle-income groups are their primary targets since the products are priced at a much lower margin compared to their competitors.

We can see that the products are priced 15-30% lower than the competition.

Across categories, the products are also segregated as per age, they have health drinks that cater to the younger audience and specific medicinal products targeting the elder generation.

2. Psychographic

Psychologically Patanjali targets health-conscious consumers, these are the people who believe that healthy products provide a better lifestyle.

They are also targeting consumers who are patriotic or feel pride in using homegrown products, thereby promoting their country in the best way possible.

Targeting

Patanjali has its own specialized targeting strategy because they cater to a lot of specific segments in the market but not the entire market.

INCOME

HEALTH CONSCIOUS

SWADESHI

Positioning

Patanjali has managed to position their products in the minds of consumers, with dual benefits.

The first benefit revolves around the combination of products made from natural ingredients at an affordable price.

They make use of their tagline to push this thought further in the minds of the consumers ‘Prakriti ka Aashirvaad’ (Blessing of Nature).

The second benefit is that about making the products in India, so there is a Swadeshi feel to it.

Related Content: Success Story of Bisleri

4. Marketing Mix of Patanjali

Product

Patanjali products fall into one of the following categories

• Health Care

• Food Products

• Ayurvedic Medicine

• Herbal Home Care

• Natural Personal Care

Their highest selling product categories include the Dant Kanti toothpaste, Patanjali Cow Ghee, Kesh Kanti shampoos, and hair oils.

Dant Kanti toothpaste launch managed to give a huge blow to the competition, over a while Colgate experienced a drop in sales volume by 4% since more and more consumers shifted to natural/herbal products.

It also led to Colgate launching their new toothpaste variant, ‘Cibaca VedShakti’.

Other players like Dabur, who already had a similar variant in the market ‘Dabur Red Toothpaste’ also experienced stiff competition from Patanjali.

In the hair care segment, chemical led products by Hindustan Unilever were affected thanks to the launch of a new herbal alternative.

Price

Patanjali operates in a very price competitive environment.

On average their products are sold 15%-30% lower than the competitors which give them a clear advantage over their competitors.

Established brands that did not consider Patanjali as a competition initially are now forced to sit and take notice and devise a strategy to compete with the same.

Place

Patanjali has a robust distribution channel through which they sell their products.

They have their own outlets which act as their main selling points.

Most of these outlets have an Ayurveda doctor for consultation who in turn recommends Patanjali products for the cure of long term ailments.

Besides these, Patanjali also has a tie-up with behemoths of modern retail like Reliance and Future Group, which carry its product range across the country.

On the e-commerce front, they have their own product website where consumers can buy their products, and now Amazon and Flipkart are also selling their products on their respective platforms.

Promotion

The majority of Patanjali’s promotion takes place through Baba Ramdev’s recommendation to his followers, to consume the products for a healthier lifestyle.

Besides that, word of mouth played a crucial role as well, since happy and satisfied customers are the best message carriers for your brand.

They also have a well-established presence on social media through their Facebook and Twitter pages.

They also make use of their YouTube channel which already has over 200 videos of Yoga, through which they push information on their products.

5. Response of FMCG Giants

Given below are the reactions of FMCG giants

Hindustan Unilever (HUL)

In the personal care category, HUL is the market leader and hence a player like Patanjali was a huge threat.

Patanjali offered various products like soaps, facewashes, shampoos, toothpaste, etc. which posed a serious threat to brands like Lux, Dove, Pepsodent, etc.

It soon launched an entire range of Herbal products under the brand name ‘Lever Ayush’.

This brand was launched in a full swing, by spending heavily on advertising and campaigning.

They also pushed their advertising budgets for their current herbal variant of toothpaste.

Colgate Palmolive

Colgate Palmolive, being the market leader in the oral care segment was hit with the toothpaste variant of Patanjali and hence had to devise a strategy to tackle the competition.

They launched their new variant ‘Cibaca Vedshakti’.

If we closely analyze this product, the packaging, etc. was also very similar to Patanjali.

They ran an advertising campaign to promote the product for an extra push.

Dabur India

On the herbal front, specifically in the toothpaste category, Dabur Red Paste was the market leader, and hence Patanjali's growth directly affected them.

During this period, there were advertising campaigns released by Dabur to push the quality aspect and promote their product.

6. Key Learnings

1. Patanjali’s Sales and Distribution strategy played a critical role in driving exceptional growth.

The lead time they considered before launching a new product and the excellent support of the R&D team, played a crucial role in the success of Patanjali.

Today Patanjali is available at every local Kirana store and also at various hypermarkets.

Their availability has also impacted their sales tremendously.

2. The majority of the sales came through word of mouth communication and belongingness of consumers to ‘Natural and Healthy’.

Today, even in their advertisements they ensure to include and highlight the part of Natural goodness which acts as their main USP.

Word of mouth communication was the driving force behind their success because consumers enjoyed their products so much that they wished to talk about them and promote them.

3. The ‘Swadeshi feel’ is considered as an added experience for users

Most of the consumers surveyed considered the ‘Swadeshi feel’ as an added experience.

They liked the fact that they were using products which were made in India, thereby promoting the hard work of their own country.

They also considered this as an add on to the quality.

Conclusion:

Patanjali is the perfect example to prove what a brand with a strong product, and exceptional distribution, can do to tackle competition.

Though today the relevance has drastically lowered, it is still a marketing case study worth analyzing.

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Also read: Understanding the Business model of Zomato