Patanjali KaranPasricha

Year of Graduation 2017
Innovative Strategies of a Home-Grown Brand: Impact

of Patanjali’s Entry in the FMCG Space
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EXECUTIVE SUMMARY
The FMCG sector is one of the largest growing sectors in India. With the consumer becoming
increasingly aware of the usage of different products and the variety available in the market, this
sector has become increasingly competitive with little room for new players. However over the
last 5 years, Patanjali Ayurved has not only established itself as one of the major players to
occupy the consumer mindspace but also a force to be reckoned with.
The objective of this report is to understand the innovationsexecuted by Patanjali, starting from
their market entry to their reliance on different methods of communicating their value
proposition of organic, nationalized products. The report is an attempt to describe the journey of
Patanjali Ayurved from an Ayurveda to a FMCG firm. It further looks at the impact on other
major FMCG players including HUL, Dabur, P&G, Emami, among others, and their response to
Patanjali’s strategy.
It further looks at the major products of Patanjali in comparison with the major products of
FMCG companies. The strategies adopted by Patanjali to dethrone the current FMCG markets
are also mentioned. An exploratory research on the responses of the consumers and their
perceptions of this brand has been done to substantiate the claims of the company that it is much
more preferred as compared to its established counterparts. The future prospects,threats to the
company and suggestions to improve are also included in the report.
The report concludes that FMCG gains as with the rise of Patanjali in India, a new trend has set
across consumers and companies. With increased innovation, consumers are getting the
maximum choice and are expected to move towards consumption of branded products, a positive
for the industry in the long term.
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Table of Contents
DECLARATION............................................................................................................. Error! Bookmark not defined.
ACKNOWLEDGEMENTS .............................................................................................. Error! Bookmark not defined.
EXECUTIVE SUMMARY ..............................................................................................................................................2
Chapter 1: INTRODUCTION ............................................................................................................................................4
1.1. The FMCG Sector..........................................................................................................................................5
1.2. Major Players in FMCG sector ......................................................................................................................6
1.1.1. Hindustan Unilever ..............................................................................................................................7
1.1.2. Britannia ..............................................................................................................................................7
1.1.3. Emami .................................................................................................................................................8
1.1.4. Dabur ...................................................................................................................................................8
1.1.5. ITC Limited .........................................................................................................................................9
1.1.6. Nestle ...................................................................................................................................................9
1.1.7. Marico .................................................................................................................................................9
1.1.8. Parle Agro .........................................................................................................................................10
1.1.9. Procter and Gamble ...........................................................................................................................10
1.3. Key Growth Drivers and Industry Overview ...............................................................................................11
1.3.1 Growth Drivers ..................................................................................................................................11
1.3.2. Market size ........................................................................................................................................13
1.3.3. Growth Opportunities ........................................................................................................................13
1.3.4. Key Challenges..................................................................................................................................13
Chapter 2 : LITERATURE REVIEW .................................................................................................................................15
2.1. What is Strategy .........................................................................................................................................15
2.2. Industry Analysis: Porter’s 5 Forces ...........................................................................................................16
2.3. Planned or Emergent Strategy? How to form Corporate Sustainability Strategies ...................................18
2.4. Competitive Advantage ..............................................................................................................................19
2.5. Green Consumers and Green Products ......................................................................................................22
2.6. Consumer attitude towards environmentally friendly products ...............................................................22
2.7. Strategic Planning of Patanjali ...................................................................................................................23
Chapter 3 : PATANJALI – A CASE STUDY ......................................................................................................................25
3.1. Foundation of Brand Patanjali ...................................................................................................................25
3.2. Evolution of Patanjali’s Business Model.....................................................................................................27
3.2.1 Entry Strategy of Patanjali.................................................................................................................27
3.2.2 Strategy Formulation: ........................................................................................................................27
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3.2.3 Strategic Alliances:............................................................................................................................28

3.3. Value Chain ................................................................................................................................................29
3.3.1. Distribution Network .........................................................................................................................29
3.4. Pillars and Brand Communication ..............................................................................................................30
3.4.1. Herbal & Organic Products ................................................................................................................30
3.4.2. Religious & Spiritual Connect ............................................................................................................31
3.4.3. Nationalised Products .......................................................................................................................31
3.4.4. Price ...................................................................................................................................................32
3.4.5. In Media.............................................................................................................................................32
3.5. The Threats & The Controversies ...............................................................................................................33
3.6. Product Portfolio ........................................................................................................................................34
3.7. The Future: .................................................................................................................................................40
Chapter 4 : PRIMARY RESEARCH AND CUSTOMER BEHAVIOUR ..................................................................................41
4.1. Objective & Research Design .....................................................................................................................41
4.1.1. Research Methodology ......................................................................................................................41
4.1.2. Online Survey: ...................................................................................................................................42
4.1.3. In Store Customer Interviews: ...........................................................................................................42
4.1.4. In Store Retailer Interaction: .............................................................................................................43
4.2. Findings and Analysis .................................................................................................................................43
Chapter 5 : INDUSTRY IMPACT & RESPONSE ...............................................................................................................51
5.1. Where does Patanjali stand? .....................................................................................................................51
5.2. Competition Reaction ................................................................................................................................53
5.3. Resultant Category Growth ........................................................................................................................54
5.4. Winners and losers .....................................................................................................................................54
Chapter 6 : Conclusions ...............................................................................................................................................56
Chapter 7 : LIMITATIONS OF THE STUDY AND FUTURE SCope ....................................................................................57
CHAPTER 8 : REFERENCES .......................................................................................................................................58
CHAPTER 1: INTRODUCTION
All companies have a certain formula which they apply to succeed in conducting business.
Starting from the research and initial analysis to gain insight into the industry the firm wants to
enter into, moving onto the entry strategy and understanding the competitive landscape to
coming up with a sustainable model to run its business to reach the customers and insuring
profits for itself, employees, shareholders and business partners. Also looking at adapting to the
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ever changing business environment to counter the competition and gain an edge in the mind of
the customers involves the company to spend considerable time, resources and money to come
up with a strategy.
Fast Moving Consumer Goods have always been attracting the Indian customers. With the urban
demands of the goods getting saturated, the manufacturing companies are taking this
development as an opportunity to expand and diversify their business in rural markets too. With
the entry of Patanjali into the FMCG sector under the guidance of Baba Ramdev and Acharya
Balkrishna the dynamics of the entire sector has changed with major players having to adapt
their strategy to counter Patanjali’s. Also with the customers looking towards Patanjali as a
natural and organic substitute to lead a healthy lifestyle, the FMCG sector has changed its
outlook towards the consumer and its demands.
1.1. The FMCG Sector
4th Largest Market: Personal Care:

in Economy US$ 13.1 Bill.
~50%
Fast Moving Consumer Goods (FMCG) goods are popularly named as consumer packaged
goods. Items in this category include all consumables (other than groceries/pulses) people buy at
regular intervals. FMCG products are consumer packaged goods that have a low stock turnover.
A low stock turnover means that these are products that need constant replenishment in a retailer
space. The most common in the list are toilet soaps, detergents, shampoos, toothpaste, shaving
products, shoe polish, packaged foodstuff, and household accessories and extends to certain
electronic goods. These items are meant for daily of frequent consumption and have a high
return. It has a strong MNC presence and is characterised by a well established distribution
network, intense competition between the organised and unorganised segments and low
operational cost. Availability of key raw materials, cheaper labour costs and presence across the
entire value chain gives India a competitive advantage. The FMCG market is set to treble from
US$ 11.6 billion in 2003 to US$ 33.4 billion in 2015. Penetration level as well as per capita
consumption in most product categories like jams, toothpaste, skin care, hair wash etc in India is
low indicating the untapped market potential. Burgeoning Indian population, particularly the
middle class and the rural segments, presents an opportunity to makers of branded products to
convert consumers to branded products. Growth is also likely to come from consumer
'upgrading' in the matured product categories. With 200 million people expected to shift to
processed and packaged food by 2010, India needs around US$ 28 billion of investment in the
food-processing industry.
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The sector is expected to grow at a compounded annual growth rate (CAGR) of 20.6 per cent,
the report said. The study titled "Indian FMCG Market 2020" elaborated that measures such as
Goods and Services Tax Bill, Food Security Bill and increased limit of foreign direct investment
will have a positive impact on the FMCG industry.
India stood second among all nations in the global consumer confidence index with a score of
128 points for the quarter ending June 2016, after Philippines (132). Further, in the discretionary
spending category, 65 per cent respondents from India indicated the next 12 months as being
good to buy, thus ensuring once again that India leads the global top 10 countries for this
parameter during the quarter.
1.2. Major Players in FMCG sector
According to the study conducted by AC Nielsen, 62 of the top 100 brands are owned by MNCs,
and the balance by Indian companies. Fifteen companies own these 62 brands, and 27 of these
are owned by Hindustan UniLever.
The top ten India FMCG brands are:

1. Hindustan Unilever Ltd.
2. ITC (Indian Tobacco Company)
3. Nestlé India
4. GCMMF (AMUL)
5. Dabur India
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6. Asian Paints (India)

7. Cadbury India
8. Britannia Industries
9. Procter & Gamble Hygiene and Health Care
10. Marico Industries
1.1.1. Hindustan Unilever
Hindustan Unilever Ltd (HUL) is India's largest fast moving consumer goods (FMCG) company
with a history of over 80 years in India. It operates as a subsidiary of the global FMCG giant
Unilever Plc.
With over 35 brands spanning 20 distinct categories such as soaps, detergents, shampoos, skin
care, toothpastes, deodorants, cosmetics, tea, coffee, packaged foods, ice cream, and water
purifiers, the company is a part of the everyday life of millions of consumers across India.
The Company has over 16,000 employees and has an annual turnover of Rs 30,170 crores (US$
4.93 billion) (financial year 2014 - 2015).
 Subsidiary of Unilever, one of the world’s leading suppliers of FMCG

 Over 16,000 employees
 35 brands spanning 20 distinct categories
1.1.2. Britannia
The company was started in the year 1892 in Calcutta (now Kolkata) as a biscuit factory with an
initial investment of just Rs 295 (US$ 4.76). From a humble beginning, Britannia Industries Ltd
is presently one of India’s most popular food industries. The company's offerings are spread
across the spectrum with products ranging from the healthy and economical Tiger biscuits to the
more lifestyle-oriented Milkman Cheese. Having succeeded in garnering the trust of almost one-
third of India's one billion population and a strong management at the helm, Britannia continues
to dream big on its path of innovation and quality.
 One of India’s oldest food companies
 Product offerings spread across a wide spectrum
 First company east of the Suez Canal to use imported gas ovens
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 One of India’s most trusted brands
1.1.3. Emami
Emami Ltd is one of the leading and fastest growing personal and healthcare businesses in India,
with an enviable portfolio of household brand names such as BoroPlus, Navratna, Fair and
Handsome, Zandu Balm, Mentho Plus Balm and Fast Relief.
Established in 1974, the company has a portfolio of over 250 products based on ayurvedic
formulations. Emami’s current operations comprise more than 60 countries including GCC,
Europe, Africa, CIS countries and the SAARC. Over 100 Emami products are sold every second
somewhere around the world.
 Market capitalisation of over Rs 10,000 crore (US$ 1.6 billion)
 Net sales rose by 16.9 per cent to Rs 1,699 crore (US$ 272.23 million) in FY13
 Strong network of 3000 distributors and 5600 sub-distributors
1.1.4. Dabur
Among top four FMCG companies in India. 14 brands have a turnover of USD16.6 million with
3 brands over USD165.9 million. Wide distribution network covering 2.8 million retailers across
the country, 17 world-class manufacturing plants catering to needs of diverse markets is at their
disposal. Dabur’s Vision Plan for 2011-15, successfully got completed with the sales of
USD1,295.6 million recording a growth of 9.7 per cent. In 2015, Dabur launched sugar free
Chyawanprash in India
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1.1.5. ITC Limited
ITC is one of the foremost company in private sector in terms of sustained value creation,
operating profits and cash profits. It is the only India-based FMCG company to feature in Forbes
2000 List. ITC is a market leader in its traditional businesses of Cigarettes, Hotels, Paperboards,
Packaging and AgriExports. The company is rapidly gaining market share even in its nascent
businesses of Packaged Foods & Confectionery, Branded Apparel, Personal Care and Stationery.
Its Agri-Business is one of India's largest exporters of agricultural products. ITC’s sales
increased at a CAGR of 7.3 per cent between FY11 and FY15 to reach net sales of USD5,985.9
million. In 2015, ITC launched its One Rural Programme focusing on penetration in villages
1.1.6. Nestle
Nestle is a Swiss transnational food and drink company headquartered in Vevey, Vaud,
Switzerland. It has been the largest food company in the world, measured by revenues and other
metrics, for 2014, 2015, and 2016.
Nestlé's products include baby food, medical food, bottled water, breakfast cereals, coffee and
tea, confectionery, dairy products, ice cream, frozen food, pet foods, and snacks. Twenty-nine of
Nestlé's brands have annual sales of over CHF1 billion (about US$1.1 billion),
including Nespresso, Nescafé, Kit Kat, Smarties, Nesquik, Stouffer's, Vittel, and Maggi.
1.1.7. Marico
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Marico Ltd is one of India's leading consumer products companies operating in the beauty and
wellness space. Empowered with freedom and opportunity, we work to make a difference to the
lives of all our stakeholders. Currently present in 25 countries across emerging markets of Asia
and Africa, Marico has nurtured multiple brands in the categories of hair care, skin care, health
foods, male grooming, and fabric care. Marico's India business markets household brands such
as Parachute Advansed, Saffola, Hair & Care, Nihar, Mediker, Revive, Manjal, Setwet, Zatak
and Livon among others that add value to the life of 1 in every 3 Indians. The International
business offers unique brands such as Parachute, Hair Code, Fiancee, Caivil, Hercules that are
localized to fulfil the lifestyle needs of our international consumers.
1.1.8. Parle Agro
Parle Agro is an Indian private ltd company founded in 1984 that owns Frooti, Appy, LMN,
Hippo and Bailey. They are the largest Indian food and beverage company, with brands that have
won the hearts of consumers everywhere, they are in almost every home across the length and
breadth of India.
In 1959, operations started as Baroda Bottling Co for carbonated beverages.
 Parle Agro, today, is a Rs 2,000 crore (US$ 319.43 crore) organization.

 Frooti, the first product rolled out of Parle Agro in 1985, became the largest selling
mango drink in India.
 Appy is the undisputed market leader in the apple nectars category with a market share of
close to 70 per cent.
1.1.9. Procter and Gamble
Richardson Hindustan Limited (RHL) was established in 1964, as a public limited company and
obtained an industrial license to manufacture Menthol and Vicks range of products. In 1984, it
became an affiliate of Procter and Gamble (P&G), USA.
P&G operates under three entities in India - two listed entities 'Procter & Gamble Hygiene and
Health Care Limited' and 'Gillette India Limited'. Today, it serves over 650 million consumers
across India and its presence pans across the beauty and grooming segment, the household care
segment, as well as the health and well-being segment. Some of its most popular brands include
Vicks, Ariel, Tide, Whisper, Olay, Gillette, Ambipur, Pampers, Pantene, Oral-B, Head &
Shoulders, Wella and Duracell.
 Ranked No 5 among the 'Global Most Admired Companies'
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 Ranked No 25 among the 'World's Most Innovative Companies'
1.3. Key Growth Drivers and Industry Overview
1.3.1 Growth Drivers
The FMCG sector in India generated revenues worth USD47.3 billion in 2015. Over 2007-16F,
the sector is expected to post CAGR of 11.9 per cent in revenues. In 2016, revenues for FMCG
sector is expected to reach USD49 billion
1. Increasing Disposable Income Levels

India’s rapidly growing economy can be reflected in increasing levels of population which
results in greater amount of disposable income which largely drives the sales of this sector.
The disposable income of the country is going to increase from $1.27 Trillion to $2.1
Trillion with CAGR of ~10% from 2015 to 2020.
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2. Shift to organised market

Organised sector growth is expected to grow as the share of unorganised market in the
FMCG sector fall with increased level of brand consciousness. Growth in modern retail will
augment the growth of organised FMCG sector
3. Increase in penetration
Low penetration levels of branded products in categories like instant foods indicating a
scope for volume growth. Investment in this sector attracts investors as the FMCG products
have demand throughout the year.
4. Rural consumption
Rural consumption has increased, led by a combination of increasing incomes and higher
aspiration levels, there is an increased demand for branded products in rural India withhuge
untapped rural market. Godrej is launching OneRural Programme to generate more revenues
from rural areas
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5. Easy access
Availability of products has become way more easier as internet and different channels of
sales has made the accessibility of desired product to customers more convenient at required
time and place. Online grocery stores and online retail stores like Grofers, Flipkart, Amazon
making the FMCG product s more readily available
1.3.2. Market size

The growing purchasing power and rising influence of the social media have enabled Indian
consumers to splurge on good things. The Indian consumer sector has grown at an annual rate of
5.7 per cent between FY2005 to FY 2015. Annual growth in the Indian consumption market is
estimated to be 6.7 per cent during FY2015-20 and 7.1 per cent during FY2021-25.
A study by US-based networking solution giant CISCO, reveals that in India, the second-largest
smartphone market globally, the number of smartphones is expected to grow strongly to over
650 million by 2019. Indian smartphone shipments increased 28.8 per cent in 2015 to reach
103.6 million, thus crossing the 100 million mark, and becoming one of the fastest growing
smartphone markets in Asia Pacific region. Smartphone shipments rose 17 per cent in April-June
2016 quarter, to 27.5 million.
The Indian beauty, cosmetic and grooming market is likely to reach US$ 20 billion by 2025 from
the current US$ 6.5 billion, on the back of growing aspirations and rising disposable income of
middle class.
1.3.3. Growth Opportunities
1. Major players of consumer products have a strengthened distribution network in rural

India; they also wish to gain from the contribution of technological advances such as
internet and ecommerce for better operations prowess.
2. Indian consumers are highly flexible to fresh and innovative products creating new
segments.
3. With rise disposable incomes mid- and high-income consumers in urban areas have
started buying premium products over the mid-range or economy segment products
present in the market.
4. Low penetration in many of the new categories has shown new areas of opportunities.
1.3.4. Key Challenges
The following are challenges faced in the sector:

1. Counterfeiting and pass-offs taking advantage of the lack of literacy & consumer
knowledge is a challenge for the FMCG sector not only affect the revenues also
undermine the brand equity of big brands
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2. Apart from the pressure on margins, the biggest fear of Indian FMCG players is the
introduction of private labels as tend to the consumer price points.
3. Retail has changed from selling a product or a service to selling a hope, an aspiration and
above all an experience for a consumer, that consumer would like to relive again and
again
4. Foreign retailers are entering into Indian market to share a huge profit through the
automatic route in cash & carry (wholesale)
5. Facing stiff competition from these global retail giants, discounting is becoming an
accepted practice which further cuts into the profit of the Indian retail players.
6. The current slow-down in the market may lesser demand of FMCG goods, mainly in the
top sector, leading to decreased volumes.
7. The falling value of rupee with respect to other currencies may decrease margins of a lot
of companies, which trade in raw materials.
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CHAPTER 2 : LITERATURE REVIEW
2.1. What is Strategy
Today’s dynamic markets and technologies have called into question the sustainability of
competitive advantage. Under pressure to improve productivity, quality, and speed,
managers have embraced tools such as TQM, benchmarking, and re-engineering. Dramatic
operational improvements have resulted, but rarely have these gains translated into
sustainable profitability. And gradually, the tools have taken the place of strategy. In his
five-part article, Michael Porter explores how that shift has led to the rise of mutually
destructive competitive battles that damage the profitability of many companies. As
managers push to improve on all fronts, they move further away from viable competitive
positions. Porter argues that operational effectiveness, although necessary to superior
performance, is not sufficient, because its techniques are easy to imitate. In contrast, the
essence of strategy is choosing a unique and valuable position rooted in systems of activities
that are much more difficult to match. Porter thus traces the economic basis of competitive
advantage down to the level of the specific activities a company performs. Using cases such
as Ikea and Vanguard, he shows how making trade-offs among activities is critical to the
sustainability of a strategy. Whereas managers often focus on individual components of
success such as core competencies or critical resources, Porter shows how managing fit
across all of a company’s activities enhances both competitive advantage and sustainability.
While stressing the role of leadership in making and enforcing clear strategic choices, Porter
also offers advice on how companies can reconnect with strategies that have become blurred
over time.
Branding Strategies
1. The “Branded House” – In this methodology, the company is the brand. All products
and services within that company will be subsets of the primary brand. A good example of a
branded house is Apple. They use a singular name across all of their activities. To all of their
stakeholders they are know simply as “Apple”. They may have different categories/divisions
(iPod, Mac, iTunes, iPhone, etc…) but they all have to fall under the scrutiny of existing
branding strategies and standards.
2. The “House of Brands” – This architecture focuses of the branding of multiple sub-
brands while the primary brand gets little or no attention. Proctor & Gamble is a perfect
example. Under P&G there are dozens of brands, including Pampers, Duracell, Gillette, and
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Tide just to name a few. However, P&G gets very little prominence of itself, and adds no real
credibility to any of it’s products.
3. The “House Blend” – This is an architecture based on the development of sub-brands
with the added credibility of the the existing parent brand. Google, for example, started as a
search engine then continued to establish the primary brand through offerings such as Gmail,
Calendar, and Maps. Eventually, they began to acquire other, smaller tech companies such as
Blogger, Picasa, and YouTube. These acquisitions maintained their existing brands but gained
credibility through the primary brand of Google.
2.2. Industry Analysis: Porter’s 5 Forces
Porters’ forces are a benchmark in industry to analyze its health. No matter how unique the
business plan is and how differentiated and coveted the offering by the company is. Everything is
dependent upon the industry if it can give you breathing space to do what you want to do. There
it becomes imperative to analyze the industry before entering. This is where Porters’ 5 forces
help you out. They help you in identifying the competition intensity of the industry and level of
profitability.
There are 5 basic forces which in combination comprehensively analyze everything that there is
about the industry:
Threat of New Entrants

- Industry is capital intensive
- Existing players can block entry by
entering into ayurvedic products
themselves
Supplier Power Bargaining power of

Industry Rivalry
- Industry depends on Buyers
- Highly competitive,
supply of organic
established players - Price & Quality are
ingredients
- Economies of scale major parameters
- Can be controlled via
- Unorganised players - Easy shift possible
backward integration
have ayurvedic centres
Threat of Substitutes
- Majorly from chikitsalayas and
ayurvedic/yogic medicine outlets
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1. Industry Rivalry: High
It is straightforward to notice that if there is high rivalry between competitors the prices
charged to consumer are highly competitive, thus making profitability take a hit. One of the
major factor to decide that is to identify concentration level of sellers. If there is a single
player in the market like Gillette in Razors, the pricing is solely under the prerogative of that
company and it is a highly desirable situation.
Patanjali competes with both organized and unorganized players in its industry.
a. The industry is highly competitive with organized players like Dabur, Zandu, Baidyanath,
Himalaya etc. These brands have established marketing channels in both traditional and
modern retail and are present in the market since last few decades. They have a strong and
loyal base of customers who has been using their products consistently.
b. The unorganized players include numerous ayurvedic centres, chikitsalayas & shalas
which make their own products for their customers, sell the same in the local market.
2. Bargaining Power of Buyers: Moderate
It all comes to buyers whether they are willing to purchase your offerings or not. The willing is
followed by negotiation and evaluation of alternatives. If the buyers have higher power to
bargain, the profitability is low for that industry. There are lot of factors that decide buyers’
bargaining power such as buyers’ price sensitivity. Price sensitivity is decided consumers’
perception of value for money. If there is no or minimal differentiation in products offered in the
industry, the buyer is likely to decide his choice on the basis of his choice.
Buyers are looking for reliable ayurvedic compositions. Price and Quality of the product are the
major determinants. Buyers do not hesitate to shift if a similar quality product is available at a
lower price from a different manufacturer.
3. Bargaining Power of Suppliers: Moderate to High
Similar to buyer power, supplier power also plays a major role in deciding industry’s
attractiveness. If the suppliers who provide raw material, packaging etc. to the industry players
have advantage and monopoly, they can raise their costs which players can’t transfer to buyer
because of existing competition, the profitability is affected in that scenario. Pharmaceutical
industry has very high bargaining power in hands of suppliers as they all have specific expertise
and one vendor is responsible for sales of that raw material to all players in market.
Since this business is highly dependent on the right ingredient, suppliers have a good bargaining
power. The bargaining power of the suppliers can be controlled by backward integration i.e. by
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establishing own herbal gardens and planting the herbs. Patanjali has controlled the bargaining
power of suppliers by becoming a fully integrated organization. It provides end to end solutions
in Ayurved.
4. Threat of New Entrants: Moderate to High
Any industry is likely to be competitive if there is high threat of entry of new players in the
industry. The threat is largely decided by a lot of factors like capital requirements and economies
of scale. Taking example of telecom industry where there is vast amount of capital required for
setting up the business and profit is only realized when you achieve economies of scale. This
makes new players to be very cautious of entering the market.
Since FMCG industry is capital intensive, the threat to Patanjali is not from new entrants in the
segment. Major threat to Patanjali is from existing players in different segments for eg Colgate
entering into the natural and ayurvedic segment through Colgate Active Salt – Neem. HUL is
also reviving its herbal brand Ayush and planning to launch more products in the natural
segment to compete with PAL.
5. Threat of Substitute Products: Low to moderate
Every player in an industry not only compete with the players inside that industry but also with a
completely another industry whose offering can be a competition to your industry.
The substitute products depend on the respective product category but generally
the category in which Patanjali Ayurved is present the threat of substitute ranges from low to
moderate.
2.3. Planned or Emergent Strategy? How to form Corporate Sustainability

Strategies
In strategy research, there is a consensus that strategy making resides on a continuum from
planned to emergent where most strategies are made in a mixed way. Different
contingency factors have been suggested to explain the factors that influence strategy making.
Sustainability research seems to overlook most of this development and assumes instead that
sustainability strategies are made in a purely planned way. We contribute to a better
understanding of the role of different strategy making modes for sustainability in three ways.
First, we point to the bias towards planned strategy formation in sustainability research.
Second, we propose a new contingency factor to help explain sustainability strategy making
based on the nature of the problem addressed. Third, we discuss strategy making for different
types of sustainability problems. Planned strategy making is expected for salient and non-
wicked problems while emergent strategy making is likely for non-salient and wicked problems
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Planned Strategy Making

The strategic planning literature has its roots in the work of Lewin who describes change
processes in his three-step model as consisting of unfreezing, moving, and refreezing
(Lewin,1947). This rather static understanding of organizational change is still at the core of
many more recent approaches (Burnes, 2004). Ansoff coined the term strategic planning in
the1960s (Ansoff, 1965; Martinet, 2010). Based on observations of actual strategy making in
leading big companies in the 1950s, Ansoff argues that strategic decisions are “made through an
organization-wide systematic strategic planning process” (Ansoff, 1987: 505). Strategic planning
is understood as a well-structured process consisting of two separate steps: first, goals are
deduced from a vision and a strategy is planned; second, the strategy is implemented throughout
the organization in order to reach these goals. The leadership of top management is crucial for
strategic planning (Hart, 1992) because it is the top management’s task to plan strategies and to
implement them in a top-down manner. The role of strategic planning in companies continues to
be debated. Maritz et al. (2011)find that companies do still plan their futures which implies that
strategic planning is still a relevant issue in management research (see also Tsai et al., 1991). On
the other hand, it has been shown that strategic planning with its assumption of rational decision
making is inconsistent with managerial reality and fails in practice (Herbert, 1999; By, 2005).
Emergent Strategy Making

One of the main critics of the planned approach to strategy making is Mintzberg who argues that
strategy formulation cannot be separated from strategy implementation (Mintzberg, 1994; see
also Mintzberg, 1978). He suggests that strategy making consists of both deliberate and emergent
elements and that the purely planned strategy is the unlikely extreme of a wide continuum
(Mintzberg and Waters, 1985). The idea of emergent strategies is that within an organization,
strategy emerges out of practice in a bottom-up or undirected way. Even though many attempts
of emergent strategy making might fail, some are successful in changing the company’s overall
direction. Emergent strategy making is “most likely to emerge at a level where managers are
directly in contact with new technological developments and changes in market conditions,
and have some budgetary discretion”. In this view, strategic decision making is an ongoing
and rather inductive change process
2.4. Competitive Advantage
Competitive advantage is obtained when an organisation develops or acquires a set of attributes

(or executes actions) that allow it to outperform its competitors. The development of theories that
help explain competitive advantage has occupied the attention of the management community for
the better part of half a century. This chapter aims to provide an overview of the key theories in
19
this space. The overview will span a long timeline, starting from the 1960s to formulations that
were introduced in mid-2013. In the early period, there were two dominant theories of
competitive advantage: the Market-Based View (MBV) and the Resource-Based View (RBV).
The notion of core competencies is closely related to the resource-based view of strategy. The
knowledge-based view and capability-based view of strategy have also been derived from the
resource-based view.
Capabilities are important because they tell you your capacities of your resources that can be
deployed to achieve the end desired result. Capabilities result in core competencies, which result
in competitive advantage. One of the most famous and widely used method to classify
capabilities is Porter’s value chain analysis. It is a sequential chain of main activities that firm
undertakes. The analysis is divided into two activities primary and support as:
FIRM INFRASTRUCTURE
SUPPORT
HUMAN RESOURCE MANAGEMENT
ACTIVITIES
TECHNOLOGY DEVELOPMENT
PROCUREMENT
INBOUND OUTBOUND MARKETING

OPERATIONS SERVICE
LOGISTICS LOGISTICS AND SALES
Firms
can achieve
PRIMARY ACTIVITIES competitive
advantage by changing its processes or itself and differentiate from the clutter. The source of the
change can be both external as well as internal. External changes could be due to change in
customer demand, price change of materials or development of new technology which is capable
of disrupting the industry. Firms which become stronger because of these changes gain
competitive advantage. For example, before the advent of internet there were on call cabs
available which took premium charges. When internet became omnipresent, the aggregators
started gaining competitive advantage as they could provide better and more hassle free services.
Generic Competitive Strategies:
1. Cost Leadership
In cost leadership, a firm sets out to become the low cost producer in its industry. The sources of
cost advantage are varied and depend on the structure of the industry. They may include the
pursuit of economies of scale, proprietary technology, preferential access to raw materials and
other factors. A low cost producer must find and exploit all sources of cost advantage. if a firm
can achieve and sustain overall cost leadership, then it will be an above average performer in its
industry, provided it can command prices at or near the industry average.
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2. Differentiation
In a differentiation strategy a firm seeks to be unique in its industry along some dimensions that
are widely valued by buyers. It selects one or more attributes that many buyers in an industry
perceive as important, and uniquely positions itself to meet those needs. It is rewarded for its
uniqueness with a premium price.
Similar Product at
lower cost
Price Premium from
unique product
3. Focus
The generic strategy of focus rests on the choice of a narrow competitive scope within an
industry. The focuser selects a segment or group of segments in the industry and tailors its
strategy to serving them to the exclusion of others.
The focus strategy has two variants.
(a) In cost focus a firm seeks a cost advantage in its target segment, while in (b) differentiation
focus a firm seeks differentiation in its target segment. Both variants of the focus strategy rest on
differences between a focuser's target segment and other segments in the industry. The target
segments must either have buyers with unusual needs or else the production and delivery system
that best serves the target segment must differ from that of other industry segments. Cost focus
exploits differences in cost behaviour in some segments, while differentiation focus exploits the
special needs of buyers in certain segments.
21
2.5. Green Consumers and Green Products
A green product as defined by Shamdasami et al..(1993), is a product which will not contribute
to the pollution of the earth and will not exploit the natural resources. Additionally, such a
product will be recyclable and conservable. A green product will reduce the impact on the
environment by utilising less toxic ingredients that won’t harm the environment.
Consumers, who according to Soonthonsmai (2007) are conscious of the growing environmental
issues and were interested in their resolution, are green consumers. According to Ottman (1992)
consumers accepted green products only after their primary requirements of quality, convenience
and affordability were fulfilled. Heavy green consumers are most likely to be influenced by
external groups: social groups, government and green groups.
2.6. Consumer attitude towards environmentally friendly products
Allport (1935), defined attitude as “a mental state of readiness which directs and influences an
individual’s response to all objects”. According to Schultz and Zelezny (2000), “a consumer’s
environmentally friendly attitude is a result of his/her perception of self and the extent to which
he/she perceives him/herself to be a significant part of the environment”. There exists a general
belief among researchers that purchasing environmentally friendly or organic products, or
products with recyclable packaging contributes to the improvement of the quality of
environment.
A consumer’s environmental attitude and behaviour is essential for a positive purchase decision
in favour of organic or environmentally friendly products, according to Roberts and Bacon
(1997).
A research paper by Isaac Cheah and Ian Phau, identified the key factors that influence
consumers’ willingness to buy environmentally friendly products. They recognised three factors:
ecoliteracy, interpersonal influence and value orientation. The necessity of the product as
perceived by the consumer moderates the relationship between attitude towards environment and
willingness to purchase environmentally friendly products.
1. Ecoliteracy:
Knowledge about the environmental friendliness of a product is in two formats: firstly, in
terms of the impact of the product on the environment and secondly, the knowledge that
the product was manufactured in an environmentally friendly way. Laroche et al. (1996)
emphasised on the importance of knowledge about the environment to shape a
consumer’s behaviour and attitude. Consumers would want complete information before
forming an attitude or opinion about a product. Education of consumer about the
22
environment has been referred to as ecoliteracy and has been found to be related to
formation of attitude about environmentally friendly products.
2. Interpersonal Influence:
Interpersonal influence refers to act of influencing others to achieve a specific result. This
is an important determinant in shaping a consumer’s attitude. The social cognitive theory
states that interpersonal influence results in a bilateral interaction between environmental
and personal characteristics. Different physical characteristics such age, gender, race
evoke different reactions from the social environment.
3. Value orientation:
Researches on environmentally friendly products frequently mention two values:
individualism and collectivism. An individualistic consumer is more concerned about
his well—being and personal gratification as compared to a collectivistic individual who
shows more concern and cooperation for the environment. Hence, collectivistic
consumers possess a more positive attitude towards environmentally friendly products.
4. Perceived product necessity:
Two types of product categories exist: luxury and necessity items. Luxury products are
usually more expensive and possess a degree of exclusivity, when compared to a
necessity product. Research says that while purchasing a necessity product,
environmentally friendly attitude plays a relatively minor role and does not affect the
purchase decision or willingness to purchase to a great extent.
2.7. Strategic Planning of Patanjali
The case study on Patanjali Ayurved Ltd. is titled Demystifying the Brand Patanjali. Acharya
Balkrishna isthe Managing Director and major stake holder of Patanjali Ayurved Ltd (PAL) but
the driving forcebehind Patanjali Ayurved Ltd is Baba Ramdev, an ascetic and yoga guru of
Indian origin. The casenarrates the growth strategies of Patanjali Ayurved Ltd and key role
played by Baba Ramdev andAcharya Balkrishna to bring it to its present stage. Authors have
used two business models namely“Value Creation and Delivery sequence” and “Strategic
Planning” model to narrate the growth andsuccess of Patanjali Ayurved Ltd. The case ends with
a peep into the future prospects of PAL.
Strategic Planning
23
Baba Ramdev and Acharya BalKrishna knew that they have created a captive market withtheir
efforts since last one and a half decade,which values health, yoga, pranayama andabove all brand
Baba Ramdev. This captivemarket is health conscious, looks out foraffordable products, believes
in the philosophyof swadeshi (home grown) and above allconsiders Baba Ramdev as their ideal.
WhenPatanjali ayurved launched its products in theIndian retail sector, this captive market
wasamong the first to buy and use its products. This captive market developed instant loyalty
toBrand Patanjali. The role of this captive marketwas not only limited to buying, using
andspreading good word of mouth about Patanjali products but they also became partners with
Patanjali by becoming their franchisees. In the initialdays majority of the franchisees established
by Patanjali came from this captive market. Thesefranchisees along with the distribution
ofproducts also advertised and promoted Patanjali products in their respective regions, hence
establishing brand Patanjali firmly into the mindof local populace. When compared to an
FMCGmultinational which uses a traditional distribution channel, Patanjali followed a
differentdistribution strategy, effective in catapulting it to its present position. Today
Patanjali'sturnover stands close to USD 1 billion (Rs 5,000 cr, FY ending 2016) with a mammoth
goal ofreaching close to USD 1.5 billion (Rs 10,000crby FY ending 2017) and close to USD 3
billion(Rs 20,000 cr by FY ending 2020). PatanjaliAyurved's value creation and delivery
strategyencompassing both the Strategic and TacticalMarketing is instrumental in making it a
force toreckon with in the Indian FMCG industry.
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CHAPTER 3 : PATANJALI – A CASE STUDY

Patanjali Ayurved was co -founded by Acharya Balkrishna and Baba Ramdev in 1977 to
propagate the science of Ayurveda. Today, some of the ayurvedic products produced by Patanjali
are a strong synergy between ancient wisdom and modern technology. Even though Acharya
Balkrishna is the primary stakeholder of the company (92% stake), the main driving force behind
Patanjali Ayurved is the charisma and philosophy of Baba Ramdev, a Yoga guru and an ascetic
of Indian origin. Its head quarter was established in Haridwar, Utrrakhand. Their core ideology is
slightly based up on the swadeshi and developing products using natural ingredients in a cost
efficient manner.
They had also stormed the FMCG segment by recording an annual revenue of Rs.5000 crores for
the financial year (2014-15) recording more than 150% growth. This report will concentrate
upon the following elements
 The foundation on which this organization was built

 Their entry into the FMCG space and their current standing
 Evolution of their business model (Pillars, comm, distribution, value chain)
 Product portfolio and the key product categories
 Future expectations
 Competition’s response
3.1. Foundation of Brand Patanjali
It all started in the year 1995 when Baba Ramdev established Divya Yog Mandir Trust with the
help of Acharya Balkrishna and Acharya Karamveer under the guidance of Swami Shankardev
ji. The trust mission was to put Yoga and Ayurved on the world map. With the aim of
popularizing Yoga, Baba Ramdev started teaching Yoga through small camps and shivirs. The
breakthrough moment came in the year 2002 when Sanskar, a spiritual channel in Hindi, signed
Baba Ramdev for its morning Yoga program. The program was a hit. Next year in 2003, the rival
channel of Sanskar, Aastha signed up Baba Ramdev for its 5 am Yoga program titled “Divya
Yog”. This programmade Baba Ramdev a household name acrossthe country. This also gave a
big boost to BabaRamdev's Yoga Shivirs/Camps.A typical Yoga Shivir of Baba Ramdev
comprises of Yoga and Pranayam postures with Baba Ramdev explaining the benefits of each of
those postures, the benefits of embracing Ayurved, the testimonials of people who got cured
from terminal illnesses by practicing yoga and pranayama, singingpatriotic songs and above all
Baba Ramdev explaining ill effects of the MNCs and theirproducts on the Indian economy and
how theyare looting India and exploiting Indian populace. It is estimated that around 70 million
25
people have been touched by Baba Ramdevthrough his Yoga Shivirs and experts assume this
number to rise to 200 million, going forward.
The live telecast of Yoga Shivirs was instrumental in building the Brand Patanjali, Yoga,
Ayurved and above all Baba Ramdev. Both Baba Ramdev and Acharya Balkrishna were working
with a single minded focus to restore the original place of Yoga and Ayurved as described in the
Indian scriptures and ethos.
An institution was setup in Haridwar under yoga guru Ramdev to help people understand and
teach others yoga so that the it could help people reach the masses. Apart from yoga ideologies,
the heritage about Ayurveda and swadeshi was also taught to them. Through these training
institutes helped people practice yoga across the country, it also helped yoga guru Ramdev as a
brand reach to every corner and made one of the most followed and well known personality in
the field of yoga. In the year of 2006 they became a registered company under the name of
Patanjali Ayurveda Limited with initial emphasis on manufacturing medicines using natural and
traditional ingredients. Upon this from the year of 2007 they started entering FMCG segment.
The basic objective of Patanjali Yogpeeth Trust is to spread the awareness of Yoga, help the
economically weak section of society by providing them free treatment of diseases and to
perform cutting edge Research and Development in Ayurved. Patanjali Yogpeeth Trust is located
on Delhi-Haridwar highway in a sprawling campus of 100 acres. It employs around 200 doctors
and has a huge treatment facility through which ayurvedic treatment is provided to the
economically weaker sections of the society. It is now a multinational organization with its
branch offices located incountries like US, UK, Canada, Nepal etc.Through Patanjali Yogpeeth
Trust BabaRamdev has touched millions of lives till date (Kumar V et al, 2014) (Kumar V et al,
2014)
Baba Ramdev and Acharya Balkrishna have established number of institutions since they
established Divya Mandir Yog Trust. Some of these institutions include:
 Patanjali Yogpeeth Trust
 Patanjali Ayurved College
 Patanjali Chikitsalaya
 Yoga Gram
 Goshala
 Patanjali Herbal Botanical Garden
 Organic Agriculture Farm
 Patanjali Food and Herbal Park Ltd
In 2006 Baba Ramdev and Acharya Balkrishna established Patanjali Ayurved to provide
products and other ayurvedic medicines to its patients. In 2012 the duo decided to unlock the
potential of Patanjali Ayurved by expanding it into the mainstream Indian retail sector.
26
3.2. Evolution of Patanjali’s Business Model
3.2.1 Entry Strategy of Patanjali
How Is Patanjali Different From P&G And HUL?Patanjali follows a ‘Branded House’ strategy
whereas other companies in the consumer goods sector like P&G and HUL follow a ‘House of
Brands’ strategy. That is the biggest difference why Patanjali was able to capture a huge market
share in such a short span whereas it took decades for P&G or HUL to reach to this point.
Patanjali is following the branded house strategy and is launching various products under one
brand, i.e., ‘Patanjali Ayurveda’. Even if you look at their advertisements, they don’t promote
individual products (say a toothpaste). Instead, they promote the entire brand which helps them
save marketing and advertising costs as well.
Under P&G, a House of Brands, there are dozens of brands, including Pampers, Duracell,
Gillette, and Tide to name a few. However, the name P&G gets very little prominence, and adds
no real credibility to any of its products. You will never see P&G promoting its company in an
advertisement. It rather focuses on the individual products.
3.2.2 Strategy Formulation:
Patanjali's strategy can be mapped to Michael Porters' Generic strategies model. Most of the
organizations follow one of the strategies as propounded by Michael Porter, there are a very few
organizations which embrace a combination of these strategies. Patanjali Ayurved Ltd has
adopted both cost leadership and differentiation strategy. Patanjali's products are generally
15% - 30% lower than that of the competition and it produces natural and ayurvedic products.
Patanjali claims that its products are free of chemicals. Thus PAL's strategy is an amalgamation
of overall cost leadership and differentiation.
The firm, in fact, has priced its product at a significant discount to others in a number of
categories, which is helping drive sales. Patanjali is also said to be benefiting from a shift in
consumer preferences towards herbal and ayurvedic products which are considered to be closer
to nature. It has also positioned itself as a swadeshi brand, which has an appeal among a category
of consumers.
The Patanjali brand architechture holds three promises-
1. These are quality products at a lower price than competitors

2. There are Indian brands and the other players are foreign
27
3. These are natural, good for health etc as symbolized by Baba Ramdev whose devotion to
yoga and Ayurved is well known.
Firstly the discounted price positioning: This is a perception in the consumers mind. However
pricing strategies are difficult to sustain as the price is dependent on input costs. Especially in
commodities it’s very difficult to defend positioning where the difference could be negligible or
even contrary. e.g. if a consumer realizes Pataljali ghee is just 5 rupees on a base price of 340
rupees they would be poisoned against the entire Patanjali brand. Patanjali could have in the long
term a couple of well publicized product that are discounted to drive Patanjali business.
Secondly, its not really well known that there is a lot of subcontracting in Patanjali. To be able to
churn products at Patanjali speed needs an ability to leverage existing suppliers and sell fhe
products. This would be an issue and an added complexity from a quality perspective. The bigger
issue is this could negatively impact the brand by affecting the self manufactured perception.
Thirdly, the Patanjali brand is political in nature. If Baba Ramdev is impacted, it could affect the
brand adversely.
3.2.3 Strategic Alliances:
Patanjali cannot stop new launches because one of their distribution strategies are Patanjali
stores which are exclusive Patanjali only stores. This is one aspect where Patanjali stands out
from the competition. They enjoy aisle space without any competition. This could be a real
competitive strength.
Strategic Distribution tie-ups with Future Group and Reliance Retail: This strategic alliance
gives Patanjali products an instant reach in all the major cities in India through 2 most prominent
brands in modern retail. Patanjali also has a tie-up with DRDO for transfer of technology in
supplements used at high altitude.
28
It depends on the category. The key focus is to strip away some of the key brand pillars of
price, quality, natural, nationalism and health from Patanjali.
It is expected that this strategic planning along with expansion in production, distribution
(traditional retail channel) and new portfolio of products will help Patanjali reach its mammoth
goal this fiscal. The story of Patanjali so far has been good but all this success did not come easy.
3.3. Value Chain
Though the product list is not exhaustive, the time period taken to launch a new product is very
low in Patanjali. Opposite to the exhaustive marketing research and design that goes into the
developing of a new product in the FMCG sector, Patanjali takes very low time to introduce it.
The problem that was echoed by many of the franchise owners and distributors is that regular
supply of the products, with low barrier cost of entry the top level management introduces new
products rapidly and is struggling with the supply of it.
In April, Mumbai-based Pittie Group, the nationwide distributor for Patanjali products, sewed up
a distribution arrangement with Apollo Pharmacy. It also has a marketing arrangement with
Kishore Biyani’s Future Retail Ltd for selling Patanjali products in 243 cities across India.
Patanjali Ayurved has also teamed up with billionaire Mukesh Ambani’s retail chain Reliance
Retail to sell its products.
Over the next five years, Patanjali will set up six more factories in other parts of the country,
Ramdev said, declining to divulge investment details.Patanjali currently has three factories and a
bunch of contract manufacturers.
3.3.1. Distribution Network

Patanjali uses multiple distribution channels to cater to the market. Company has a reach of 0.2
million outlets. Patanjali has scaled up its distribution significantly over the last few years, and is
now available to consumers through three main avenues: 1) its exclusive outlets 2) general retail
outlets and 3) e-commerce.
PAL has a strong presence in the market through its 1200 chikitsalayas, 2500 arogya kendras,
7000 open store in villages and 5600 marketingvehicles.
Chikitshalyas: The Chikitshalyas were franchise stores of Patanjali Ayurveda Limited that
operated along with an Ayurveda doctor appointed by the Company. These stores had the liberty
to store all of patanjali pharmaceutical products and FMCG products. Initially they served as a
Ayurveda hospitals under the banner of Patanjali, with an visiting Ayurveda Doctor. The salary
for the doctor was borne as an expense between the franchise owner and the company, where the
salary for the Ayurveda Doctor was Rs.15000 per month.
29
Arogya Kendras: Arogya Kendras are nothing but the same as Chikitshalyas without the
requirement to appoint a Doctor and exclusivity to store mostly FMCG products and medicines
that didn’t require a doctor’s prescription. An initial setup cost of Rs.50000 as donation was
required to setup an Arogya Kendras. The margin for Chikitshalyas and Arogya Kendras were 15
to 18% depending upon the products. And all of the orders made through the outlets were cash
and care business model.
Retail outlets:Apart from being present in exclusive outlets, products are also available on
general retail sale. The group plans to expand its distribution network by 10x with regards to this
channel over the next few years. Products are also available at chemists.
E-commerce: During the last year, Patanjali has aggressively made its products available online.
Apart from having a presence on third-party e-commerce websites such as Amazon.com and
Bigbasket.com, the company is also selling via its website www.patanjaliayurved.net, which
offers free delivery for orders above INR499. Patanjali is also implementing its ERP for better
inventory management and has implemented SAP already.
3.4. Pillars and Brand Communication
Patanjali has used different promotion strategies as follows:
3.4.1. Herbal & Organic Products

Patanjali is also said to be benefiting from a shift in consumer preferences towards herbal and
ayurvedic products which are considered to be closer to nature.
Over the next few years, Patanjali will focus on six areas: natural medicine, natural cosmetics,
natural dairy products and food, natural cattle feed and feed supplements, bio-fertilizers and bio-
pesticides, and natural indigenous seeds, said Ramdev.
30
A Euromonitor survey on the use of natural products in India revealed that the use of natural
ingredients is increasingly important, especially in skin-care products, the largest category in
beauty and personal care. India is one of the largest markets for such products, along with
Germany, Indonesia & China. The survey shows that despite rural Indians having lower
disposable incomes, consumers in this segment have huge aspirations to buy the product. Given
Patanjali’s product portfolio & possible distribution reach, it should be a key beneficiary of this
trend.
3.4.2. Religious & Spiritual Connect

Baba Ramdev through his Yoga Shivirs not only talks about the different Yoga postures and
their benefits in curing the diseases but also about the Patanjali Ayurved products aiding in a
healthy lifestyle and a disease free life. This is one of the most potent promotion tools used by
Patanjali.
Brand Baba Ramdev: Popularly known with the perception of Yoga guru of modern India,
Baba Ramdev has a huge following in every part of our country. He works as a catalyst to
amalgamate the Indian belief with customer’s loyalty towards the brand Patanjali Ayurved.
3.4.3. Nationalised Products
It has also positioned itself as a swadeshi brand, which has an appeal among a category of
consumers.
People who work at Patanjali profess to have joined the company to promote a “good cause”—a
movement that Ramdev calls “swadeshi andolan” (literally, indigenous or local protest, a
movement for freedom from the clutches of MNCs).
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Re-inventing the hand-woven fabric that is usually related to nationalism, Patanjali has plans to
enter the market with a Khadi clothing line, which includes everything “from langot (nappies) to
coat” and is also exploring all options to manufacture unique organic clothes for people suffering
from diabetes, obesity and other diseases.
Sensing this opportunity, suppliers of this fabric such as the Raymond Group and Ahmedabad-
based textile manufacturer Arvind have also approached Patanjali with their cloth samples for a
profitable tie-up. Ramdev has further stated, “If khadi products are being sold by foreign
companies like Fabindia in our country; it is political murder of Mahatma Gandhi and his
ideology.”
Piggybacking over the ‘Saffron lobby’, They Initially targeted the Indian audience who are a
firm believer of indigenous products. Patanjali successfully infused western products with the
‘Desi’ branding to gain the trust of the audience who were looking for a reason to despise
necessary but expensive foreign brands.
3.4.4. Price
Patanjali relies on a cost leadership strategy when it comes to the product categories where it is
competing with MNC’s which have similar products selling at a much higher rate.
categories, which is helping drive sales.
Patanjali has the ability to price its products at a 26.5% average discount to the competition. Our
analysis shows that PAL’s products are priced at a significant discount to peers in many
categories such as shampoo, toothbrushes, detergent powders and face wash. The rationale that
Patanjali provides for such steep discounts is that its objective is to make products available to
the consumer at the most reasonable price.
However, there are a few categories where Patanjali products are priced at a premium, but these
are few and primarily in mass categories which either have defined market leaders or are
intensively competitive, such as soap and coconut oil. Ghee is priced at a premium because of its
positioning as a pure natural product.
3.4.5. In Media
Patanjali’s expansion is backed by a high-powered marketing campaign led by Ramdev himself.
Between January and March, Patanjali Ayurved doubled the number of advertisements it airs on
TV channels, according to data from television viewership measurement agency Broadcast
Audience Research Council India, or BARC.
Patanjali’s weekly ad insertions on television jumped 102% from 11,897 in the first week of
January to 24,050 in the week ended 25 March, according to BARC. Ad insertions by Patanjali
are 20% more than those by the next most-advertised brand on TV—Cadbury, a chocolate brand
owned by Mondelez India Foods Pvt. Ltd.
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According to Anuja Chauhan, creative consultant at advertising agency JWT India and a writer,
“Patanjali is riding on Ramdev’s huge fan following. The company got two things right—one,
the whole India-ayurveda connection and, second, the MNC style of advertising.”
His own channel, Aastha, is a handy marketing tool as well. Ramdev and Balkrishna converse
about how good Patanjali’s XYZ product is is and how it will impact the consumers daily life in
a positive way.
Word of mouth communication certainly has a higher believability factor compared to other
mediums of advertising. Baba Ramdev has created a strong community of loyalists through the
efforts of PatanjaliYogapeeth Trust and Yoga shivirs.
Patanjali has also embraced digital marketing and has a well-designed facebook page and twitter
account. Patanjali ayurved has its channel on youtube which features more than 200 videos on
Yoga and product information. Baba Ramdev's books and VCDs are notonly an excellent
information disbursal tool but also a subtle promotion tool.
The above mentioned strategies have helped Patanjali reach a turnover of close to a billion
dollars. But Patanjali has set ambitious goals for itself. Is it possible for Patanjali to clock a
turnover of USD 1.5 billion (Rs 10,000 crore) in the next financial year and USD 3 billion (Rs
20,000 crore) by the end of FY 2020. The Strategic Planning process (Kotler et al, 2008) will
through more light on how Patanjali can attain its goal in the near future.
3.5. The Threats & The Controversies
One of the biggest threats to Patanjali is that more than 40% of the turnover in the present fiscal
has come from only 4 products (Ghee, Tooth Paste, Shampoo & Hair Oil). Some of the product
33
categories are not doing as well as they were initially predicted to do. Baba Ramdev has been
controversies favourite child and being a co-founder of Patanjali Ayurved, the company is also
mired in numerous controversies. Some of them are:
1. Baba Ramdev is often accused of playing the same game as MNCs in the garb of Swadeshi
and Bharat Swabhiman. Experts claim that there is nothing ayurvedic in food products like
noodles,corn flakes, biscuits which come out of similar assembly lines as that of other
MNCs. Only a wheat based cereal doesn't make products ayurvedic.
2. Patanjali's share of controversies also include its recent tussle with Food Safety and
Standards Authority of India (FSSAI) on the issue of necessary approvals required for its
noodles brand.
3. In December 2015, Patanjali faced 2 fresh controversies.
 Firstly, a Tamil Nadu based religious organization, The Tamil Nadu Thowheed Jamat
issued a fatwa against Patanjali products, claiming that all Patanjali products are based on
cow urine which is “haram” for their community.Acharya Bal Krishan, Managing
Director, replied to the allegations byclarifying that only 5 products out of arange of close
to 700 products from Patanjali contain cow urine.
 Secondly, there were reports of bugs found inside the packet of noodles in Jind, Haryana.
4. There is also a report of cases being filed with Advertising Standards Council of India
(ASCI) with regard to PAL's misleading advertisement.
5. Patanjali’s juice products, which Ramdev claims to be natural, contains added sugar, water
and required preservatives.
3.6. Product Portfolio
Patanjali Ayurved operates through three main divisions: FMCG, Foods, and Ayurvedic &
Herbal Products. The FMCG division consists of personal wash, fabric wash and HPC products,
which include categories such as skin, hair and oral care. In the food segment, items include
biscuits, cooking oil, breakfast cereals, jams and milk products. The company’s oral care and
ghee products are particularly popular. The Ayurvedic & Herbal Products division sells items
such as Chaywanprash, Bhasm and other medicines. This is a new category in which Patanjali is
focused on growth. Fig. 24 displays the breadth of PAL’s main product range across each of the
three divisions (it is not a complete illustration of all Patanjali products; it has launched several
new products such as Sheetal Oil, the Saundarya beauty range and other OTC medicines,
including ethnic items and packaged staples in both the conventional and the unconventional
FMCG space).
34
35
Category Products
Natural Food Products  Dals and pulses
 Edible oil
 Ghee
 Flour/Atta
 Staples / Spices
o Spices
o Salt
o Rice
 Confectionary
o Biscuits
o Cookies
o Candies
 Snacks and Breakfast
o Honey
o Papad
o Namkeen
36
 Sauces and Pickles

o Ketchup
o Pickles
 Sweets
o Murabba
o Soan Papdi
Ayurvedic Medicine  Juices & Fruit Drinks
o Apple, Amla, Litchi, Guava, Mango
 Sharbat
 Squash
Herbal Home Care Products  Agarbatti
 Dish Wash
Natural Personal Care  Face Care
o Face cream
o Lip care
o Face wash
 Body Care
o Body wash
o Lotions
 Hair Care
o Shampoo
o Conditioner
o Hair oil
o Hair color
 Soaps
 Hand wash
 Oral care
o Tooth brush
o Paste
 Makeup
o Kajal
 Shaving cream
o Shave gel
o Shave cream
Natural Health Care Products  Health Drinks
 Nutrition and Supplements
o Chyawanprash
o Badam pak
37
38
39
3.7. The Future:
PAL is a trendsetter in the Indian FMCG sector. It has grown at a phenomenal pace in the last
half a decade. Growth in demand has also put pressure on the pace of production to satisfy the
rising needs of consumers.
 Today, Patanjali has one manufacturing plant in the holy city of Haridwar but Patanjali
Ayurved will require more production facilities to cater to the rising demand of its
products in the country. So Patanjali has decided to establish 4 more manufacturing units
in the country.
 The planned manufacturing plants may come up in the states of Maharashtra, Punjab,
Andhra Pradesh and Madhya Pradesh. Patanjali wants to set up its new manufacturing
plants closer to raw material source. Easier and direct availability of raw material will
also bring down the cost of production.
 Rs 1000 crores has been earmarked for the expansion this fiscal. The finances will be
arranged from the internal accruals and loans from SBI and Punjab National Bank.
 Patanjali Ayurved is also entering into the dairy segment with the packaged cow milk.
The company has already acquired a dairy plant in Ahmednagar , Maharashtra with a
plant capacity of 12 lakhs litre/day but the company is investing more money in the
facility to increase its daily output to 70-80 lakhs litre/day
 Patanjali has also pledged to plough back majority of its profits in operations, which in
turn will help Patanjali better its position in the growing market.
40
CHAPTER 4 : PRIMARY RESEARCH AND CUSTOMER

BEHAVIOUR
In this chapter we will focus on the primary research conducted to understand the reaction of the
consumers and the value chain to Patanjali products and competition.
We will talk about the objectives for the research, the research methodology and design followed
by the analysis of the data collected. Post which the inferences of the data and the observations
will be discussed to draw qualitative conclusions on Patanjali’s success story till date to
substantiate the content discussed in the previous chapters.
The approach of this research study was a deductive approach. Qualitative method in primary
data collection that provides a deeper understanding of the problem is used. The primary data is
used with the aim of strengthening the content of the entire work. An Exploratory research was
done first to provide more information to make comparison, interpretation and understanding the
primary data.
4.1. Objective &Research Design
After having understood the rise of Patanjali and gaining an in depth idea about how the
company has been able to challenge long established players, a primary research was undertaken
with the following objectives:
 Gain consumer insight on purchase behavior of FMCG products
 Gain consumer insight on perception of Patanjali
 Idea on comparison of Patanjali products with other FMCG majors’ products according
to the consumers, retailers.
4.1.1. Research Methodology
The research comprised of one-on-one personal interviews with customers and retailers along
with online survey. The research model was descriptive to gain qualitative insights into the
success of Patanjali.
In order to understand the perception of Patanjali as a brand and the ground reality of its
magnanimous success over the last 5 years, data was collected through 3 means.
1. Online survey of consumers to gauge their view on various Patanjali product purchases and
a ranking of the respective products with their counterparts from branded firms
41
2. In store interview with 2 individuals from different age group and background in order to
understand the minute elements and reasons behind the purchase decisions
3. In store interview with retailers to gauge their viewpoint on customer acquisition by
Patanjali and their reason for being part of Patanjali value chain
4.1.2. Online Survey:
The Survey was made with the objective of gauging consumer awareness of Patanjali products
and the frequency of purchase of the respective products.
The questions which were covered in the survey also reflect upon the perception of Patanjali in
comparison with other major brands in the market and how the consumers would rate the
different categories of Patanjali in the FMCG space. There were a total of 101 responses to the
online questionnaire.
The survey was divided into 3 parts.

 The first part was to gain a basic understanding of the customer to do his segmentation.
To understand the sample spread.
 The second part was in context to customer basket analysis. This was important to see the
purchases made by the customer in the store and the percentage of Patanjali products that
were purchased.
 Lastly the third part was to know where Patanjali stands with respect to the different
brands and also to see the reasons behind the purchase decision of the customer for
Patanjali products.
4.1.3. In Store Customer Interviews:
The questions which were asked in the online survey were taken up as an assumption to the
customers in modern trade outlets, both dedicated Patanjali stores and also general retail outlets.
The customers were asked about the frequency of purchase of products and the reason why the y
have shifted to and/or stayed loyal to Patanjali products.
Along with this, their perceptions on what were the reasons for Patanjali’s success on a massive
level were also discussed to gauge an insight in their understanding of the Brand Patanjali and
how closely did they associate themselves to it.
The first interview was conducted with an college going student who lived alone and made all
purchase decisions on his own. He had his friends and colleagues as major influencers and was
aware of Patanjali’s meteoric rise in recent times and also the different methods employed by the
company to succeed in the FMCG space.
The second interview was with with a working professional, aged 40+ years, who had been
purchasing products from different companies throughout but had different factors to consider
when it came to the purchase decision. For example, health and hygiene was a major influencer
in his decisions along whereas the college student had price as a major factor in his decisions.
42
The second interviewee was also aware of Patanjali’s entry in the market however the
perspective that he offered on its being was different from that of the youth.
4.1.4. In Store Retailer Interaction:
The interaction with the retailer was helpful to understand why he had chosen to be a part of
Patanjali’s value chain. Also he was able to provide a perspective on which of Patanjali products
were successful and which were riding on the wave which the company along with their
marketing strategy has left in its wake.
4.2. Findings and Analysis
The survey responses were recorded over the month of January and February with respondents
being majorly located in metro cities, ie, Delhi, Chennai, Mumbai, Kolkata and Bangalore.
 Gender
 Age
 Occupation
43
The survey was given by 101 respondents. From the above charts it can be observed that the
survey was majorly responded by urban located individuals who are in the age group of 18 – 30
years of age. These individuals are either students or working professionals located in metro
cities. The major portion of the survey was dominated by urban male population, which at this
point of life is equally aware of the differentiated and variety of products available in the market
and the variety which Patanjali is offering at this point to the customers. They are also clear on
the different value propositions which Patanjali has been using to connect to the customers,
including the image of Baba Ramdev, the spiritual and yogic connect, along with the herbal and
organic products being offered by a Swadeshi outfit.
Must of the individuals who were a part of the survey make the purchase of all comparable
FMCG products themselves. Today’s youth is well informed and since the survey is concentrated
around students and working professionals, it is pretty clear that the individuals frequent stores to
make the purchase.
In terms of the method of purchase, it can be both Online, through websites like Grofers, Big
Basket or other marketplace platforms; or via Store Visits to both local kirana outlets and/or
Modern trade outlets like Big Bazaar, Future Stores etc.
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Patanjali Product Category

Preference
Patanjali has its presence in 5 different categories, ie, Natural Health Care Products, Natural
Food Products, Ayurvedic Medicine, Herbal Home Care, Natural Personal Care products. In
each of these categories they have taken on different brands like HUL, P&G, ITC, Dabur,
Emami among others. From the above bar chart it can be seen that Natural Personal Care
products, which has a preference in 69% of the respondents, are a major source of revenue for
the company. As stated in the previous chapter as well, the Hair, Skin and Dental care products
that the company currently has in the market have been selling like hot cakes, with the
consumers lining up to not only make a one-time purchase but also to stock up on these items for
the entire family.
45
When it comes to the purchase decisions, they vary from person to person depending on the age,
occupation and which walk of life he/she belongs to. In this case there was an overwhelming
majority for Herbal & Organic products being the reason behind consumers’ purchase of
Patanjali products, irrespective of the age and/or occupation. Around 73 of the 95 respondents in
the age group of 18-30 years were motivated to purchase Patanjali because of the relatively
cheaper price and it providing herbal and organic products. This is seen as a step in the direction
towards a healthy life by most of the individuals.
Baba Ramdev has been promoting Patanjali as a Swadeshi brand which should be available at
each and every nook and corner of the country. This has influenced a set of individuals who
really on the marketing campaigns of Patanjali and would prefer the local kirana outlet making a
profit as he has been working hard for it.
50% of the individuals have been purchasing Patanjali products with an additional 20% being
one time users but are satisfied with the performance of the goods. This is majorly due to the
expectations being met by Patanjali, whether it be the quality of the product, being herbal and
organic in nature. Or whether it is due to the marketing campaigns followed by the company,
which is associating the products to - Swadeshi, easily available at a relatively lower price and
associated to the yogic guru Baba Ramdev.
Only 6% of the survey respondents had not used the products which talks about the penetration
of the brand and its reach to different consumers.
Patanjali Hair Products Versus Industry top performers
46
For Hair and Skin care, Patanjali has been competing with the likes of Dabur, HUL and P&G.
For Hair products over the last 5 years people have started to recognize Patanjali as a major
player. However it is still not been able to displace Dabur Vatika and Marico’s Parachute hair
oil, which are major Indian players. The foreign players are led by L’Oreal Paris, which offers
entire head and hair therapy for which the consumers in the age group of 18-30 years have put
their faith as it is an established brand. However majority of the users of L’Oreal products have
also stated that they have purchased Patanjali products and would do so again in the times to
come.
Patanjali Dental Products Versus Industry top performers
Within Patanjali’s portfolio, its toothpaste has achieved widespread recognition among
consumers. In Oral Care, Dant Kanti continues to be one of the products in greatest demand,
47
according to the company. Dant Kanti has also been able to gather share in the toothpaste market
in a short space of time. Given its introduction of new variants such as medicated, advanced and
junior, we can expect this share to increase. It is estimated that Dant Kanti will contribute ~5% to
overall sales in FY16, with a ~4% market share of the overall Oral Care category.
Through the above graph, it can be easily gathered that Patanjali is directly competing with
Colgate Palmolive in this arena and has already taken over Pepsodent and Dabur Red, Meswak
as the major player in the minds of the consumer.
Patanjali Health care & Foods Products Versus Industry top performers
Fruit juices is one category where Patanjali is yet to make a name, lagging behind Dabur,
PepsiCo and ITC products, which are the major shareholders of the consumer mind and throat
space. However that is not the case with all food products. Patanjali has also stated that its Cow’s
Ghee is the most sought-after food product across the country. According to PAL, Cow’s Ghee is
expected to contribute INR12bn (~20% of sales) in FY16 to the top line, implying that the
product captures a ~15% share of the total market of INR75bn.
In store Consumer Interview 1:
The interview was with a student aged 24 years and took place in a modern trade outlet. The
individual was aware of Patanjali and when asked what were his regular brands for day to day
use, he stated that he preferred Patanjali in personal care products since they didn’t not contain
synthetic materials as compared to other majors. But in case of health care and nutrition products
he preferred ITC, Marico and Dabur’s products. Even though he had tried out the products
offered by Patanjali, he had not been able to develop the taste for its products. Since he was well
aware of the news related to the company, he stated that the controversies associated with
Patanjali’s noodles and Marmalade were another reason why he had been deterred to try out its
different products. This was a clear indication to the kind of impact that a Branded House has on
48
its product portfolio. Also, the fact that Patanjali was easily available he was biased towards its
products as they could be purchased anywhere.
Through this interaction I was able to fathom that Patanjali has made a mark in the mind of the
youth, where the major purchasing power lies in today’s world. The youth of today is moving
towards a healthy lifestyle and for this reason would be interested in trying out Patanjali’s
products which have been characterized by herbal and organic ingredients.
In store Consumer Interview 2:
The second interview was with a working professional aged 40+ years who was shopping in a
Patanjali franchisee store. He was there to buy personal care, natural food products and
ayurvedic medicines.
He was of the opinion that Patanjali has been riding on the Baba Ramdev wave when it comes to
promoting and advertising the products, however the reason why so many people have shifted
base from different brands to Patanjali is due to the quality of the items. Patanjali has been
providing quality products to the consumers and that is why people have been willing to stick to
the brand. However the Food products have an equal trade off with other FMCG majors, as
Patanjali ghee is more expensive than ITC and Dabur’s products.
He watched Baba Ramdev’s show in the morning daily and was of the opinion that that was an
emphatic reason for the people to buy these items. Offering of Swadeshi products was a positive
aspect since according to him this gave the people of India a chance to a good livelihood as
Patanjali was employing a major chunk of the workforce.
Through this interaction I was able to conclude that Patanjali has been consistent with its quality
of Herbal and organic products and Baba Ramdev advertising these as a Swadeshi success has
been a factor into its rise.
In store Retailer Interaction
The retailer spoke to me about the reason why he had chosen to book himself as a Patanjali
franchisee outlet and what was his perception of the brand as he saw people purchasing Patanjali
products on a daily basis.
He pointed out the he was late in joining the Patanjali bandwagon and the only reason why he
did so was because he saw their products being sold in all outlets and he himself was purchasing
those products. The customer in him told him to start selling Patanjali products. He had to
register online and after a background check he was given the license.
Patanjali, in order to expand its reach, checks the competitor stores in the locality, the other
nearest Patanjali outlet, the customer reach and the availability of vehicle for delivery of
products from store to end customer before giving any outlet a license.
With regards to the sale of the products, he pointed out that the quality and presence of organic
and herbal ingredients made a huge impact in the consumer mind space as the market is filled
49
with synthetic goods. Dant Kanti, Kesh Kanti, Patanjali soap, Ghee and Atta were major sellers.
However they have not been able to make a foothold in the other foods items.
Ayurvedic medicines have been also selling and customers can see the difference between them
and other antibiotics sold in the market, as this would form a part of their daily routine without
having to rely on doctors’ prescriptions.
To conclude, Patanjali through their innovative marketing strategies, ie, using Baba Ramdev as
a representative for branding, advertising herbal and Swadeshi made products has led to the
company being identified as a major brand for the consumer. The quality of the product has
ensured that the customers stick to the brand and/or switch brands to Patanjali. This is a major
way they have ensured a sustainable business model.
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CHAPTER 5 : INDUSTRY IMPACT & RESPONSE

5.1. Where does Patanjali stand?
When we compare revenues with its listed peers, in a fairly short time, Patanjali has already
broken into the top 10 largest companies in the domestic consumer space.
With the exception of ITC, most companies have taken an average of 15-20 years to develop a
strong consumer base along with a solid distribution network leading to revenues of more than
INR10bn. Patanjali and ITC we consider as exceptions, both having more than doubled their
revenue bases in a short time.
In the last three years, Patanjali has been able to achieve revenue growth of over 60% compared
to average FMCG sector growth of ~14%. As shown in Fig. 23, Patanjali has outperformed HPC
and F&B companies over the last three years in terms of revenue; although companies such as
Dabur and Emami have similar portfolios, they only showed revenue growth of 12.7% and
13.9% respectively. The company seems to have been able to achieve this on the back of its
diversified and wide portfolio, unique pricing strategy, strategic positioning and continuing
innovation.
categories, which is helping drive sales. Patanjali is also said to be benefiting from a shift in
consumer preferences towards herbal and ayurvedic products which are considered to be closer
51
to nature. It has also positioned itself as a swadeshi brand, which has an appeal among a category
of consumers.
However, the critical question now is, what does the rapid rise of Patanjali mean for other
businesses in categories where it has a marked presence or plans to enter? To be sure, the rise of
Patanjali has increased competition for incumbents in a number of product categories. But the
effect of competition is likely to be different for different companies. While the impact is likely
to be more profound on smaller businesses with a limited product portfolio, the effect on
established companies with leadership positions and strong balance sheets is likely to be limited
for a number of reasons.
For instance, Patanjali is currently focusing on adding more categories and products, which will
give time to companies with scale and depth to adjust if required. Firms with leadership positions
52
in respective categories are there for good reasons and not necessarily because of lack of
competition—they can always adjust their product portfolios if consumer preferences actually
begin to shift.
5.2. Competition Reaction

In response to the new competition, companies have already started reacting, either through trade
discounts on existing products or product innovations in the herbals and naturals space. Emami
has several launches under its Zandu brand, including its recently launched Honey. HUVR has
resurrected its herbal brand, Ayush, acquired a new brand, Indulekha, and has further plans to
increase its natural offerings. GCPL too has launched a neem mosquito coil, creme hair colouring
containing coconut oil and new variants in natural soaps.
Companies such as HUVR are still growing faster than the industry (it is achieving volume
growth of 6% compared with an industry average of 3%) and are able to hold on to their market
share, but overall the theme of using natural ingredients in products seems to be working.
We believe that Patanjali will not be a threat to the existence of the market leaders, given its lack
of depth in the product portfolio and current lack of a rural sales presence. However, we believe
the pace of market share gains for leaders and other large companies in the space will be affected
by PAL’s entry. We have already seen this in Oral Care.
Focus on Ayurveda to increase
The penetration level of ayurvedic products is still quite low in India, and new entrants should
help expand this market. Given the initial response of consumers to such products, we expect
several innovations in this direction.
No more anchor products

Previously, market leaders such as Britannia Industries and Colgate Palmolive acquired
significant market share through their anchor products in Biscuits and Toothpaste. This set the
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trend across companies to develop a core brand, and sub-variants around it. Patanjali has
disrupted this trend, being able to gain market share and loyalty despite not having a focal brand.
This we see as an opportunity for several small and new companies wanting to enter FMCG.
5.3. Resultant Category Growth
As mentioned above, our view is that when consumers are offered more choice, especially at
affordable prices, one can expect the category to expand as more consumers enter the space. For
example, Euromonitor market data for the Breakfast Cereals category in India show that during
the period 2002-06, the category grew at an average rate of ~12% pa. Since then, with the advent
of private labels and the development of new sub-categories (such as oats), the average year-on-
year growth rate has risen to 26%. We believe this increase has been driven by new competition
in the category. PAL’s entry into the space could lead to a similar trend, in our view.
5.4. Winners and losers
While we do not expect Patanjali to displace the current market leaders, we expect the pace of
market share gains for a few companies under our coverage to slow considerably. We analyse the
near-term impact of PAL’s entry and possible dominance in a few categories in the HPC and the
F&B space on consumer companies using the following metrics:
Overlap in markets and key products:This metric compares companies under our coverage with
Patanjali on the basis of similarity in target markets and key products. For example, we consider
Dabur, Emami and HUL to be key participants affected by this metric, given the ‘Indian-ness’ of
their portfolio whereas others such as GCPL should not be affected to such a great extent. If and
when Patanjali enters the malted drinks space (expected launch due soon), we would expect GSK
Consumer to be affected.
Current position in the market: We believe those companies with leadership positions in their
target markets, along with a presence in a single category, will not be upset to such a great extent
54
by PAL’s entry, because given PAL’s current strategy of exploring breadth rather than depth, it
would be difficult for it to acquire a significant share in any category. While Patanjali might be
successful in gaining market share, we presume these gains will come from the smaller
companies rather than the FMCG majors. Apart from this, those present in single categories will
be able to employ aggressive tactics to maintain market share. For this reason, companies such
CLGT, BRIT and GCPL are well placed.
Innovative ability: Dabur has an innovation-rich pipeline, as does Emami. In our opinion,
CLGT has been a laggard in the natural space and might be affected by this trend.
Focus on ‘premiumization’: Given our assumption that PAL, with its simple packaging and
affordable pricing compared with peers, is targeting low- to mid-level urban consumers, we
believe companies with a premiumization focus will be able to sustain their existing market
share. Companies with a complete portfolio targeting the upper end of urban consumption, with a
key focus on premium products, are less threatened by PAL, in our opinion, as they target
different consumers. Companies like BRIT and HUVR are targeting top tier urban consumers
with different, higher-quality products and better packaging. PAL’s preference is to focus more
on customers looking for value.
• Ad spend: I believe companies such as HUVR and ITC, which capable of adjusting their ad
spend based on the current market scenario, both in terms of demand and competitive intensity,
are placed at an advantage to other peers.
• Aggression in the market (historical): In the past, companies such as HUVR and CLGT have
been able to ward off possible new entrants, cases in point being Nirma in 1980 and P&G in
2014.
55
CHAPTER 6 : CONCLUSIONS
The report concludes the FMCG market has been cluttered with a number of major players and
each of them offering a unique proposition but with a conventional formula to success. However
Patanjali, over the last 5 years, has been able to establish a foothold in the FMCG industry. This
is due to the diverse innovative strategies employed by the company to emerge as a major player.
The consumers today are looking for healthier options and Patanjali has been able to build on
that by providing herbal and organic products at a lower price for majority of the products
available easily.
Baba Ramdev has become a cultural icon today and under his guidance people have started using
Patanjali. This innovative strategy coupled with the fact that Patanjali is a Branded House has led
to the company occupying the He has been promoting the brand as ‘Swadeshi’ and one which
will improve the country, not only individuals’ physical fitness but also through creating jobs
and impacting each individual’s daily life.
The competitors have started to counter Patanjali by coming up with their own organic and
ayurvedic products which the customers can associate to, more closely. However this company
holds a first movers’ advantage and has established itself throughout its value chain with more
and more retailers joining Patanjali brand. Its major successful products have been from the
Dental care category and Patanjali Natural foods products, majorly Ghee.
To sustain this success the company needs to realise that a Branded House has its limitations and
relying heavily on Baba Ramdev cannot work in the long run since at that point quality trumps
all other innovative strategies.
The current consumer has increased awareness and purchasing power, which means that besides
the traditional customer, Patanjali needs to focus on the new and vibrant youth which will impact
its sales. The competitors meanwhile have lost marketshare to Patanjali’s entry and the impact
has been observed throughout the major players of each category.
In the end, FMCG gains as with the rise of Patanjali in India, a new trend has set across
consumers and companies. With increased innovation, consumers are getting the maximum
choice and are expected to move towards consumption of branded products, a positive for the
industry in the long term. For the companies on the whole, this trend is a key positive, given that
natural products can be priced at a premium to other products in the portfolio, which allows for
margin expansion.
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CHAPTER 7 : LIMITATIONS OF THE STUDY AND FUTURE

SCOPE
The study undertaken has a number of limitations, which in turn provide scope for future
research on the topic.
The project was carried out for a sample set of 101 respondents of the survey along with limited
in store interviews with customers and retailers. This was done through convenience sampling
and could be increased for better qualitative analysis. Instead of convenience sampling, stratified
sampling could have been used and changing attitude of different sets of consumers towards
Patanjali products could have been measured.
In addition to this, focus group discussions can be organized in order to explore beliefs and then
a detailed questionnaire according to the discussion can be prepared. Such a methodology could
not have been followed due to unavailability of a stratified target group for discussion.
In FY16/17, Patanjali stated that it would majorly concentrate on exports to target established
multinationals. However, problems encountered with Food Safety and Standards Authority of
India impacted its image. A further exploration could be done of the same to find the growth
trajectory of the firm.
A further analysis of the response of the other major FMCG firms could be done. In order to
understand the innovative strategies in the FMCG space, the other major organisations, are also
coming up with new strategies to counter the Patanjali roadblock. These could be analyzed in
depth in order to get a holistic picture of the FMCG landscape when it comes to the innovations
involved.
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Year of Graduation 2017

Innovative Strategies of a Home-Grown Brand: Impact

3.2.3 Strategic Alliances:............................................................................................................................28

1.1. The FMCG Sector

4th Largest Market: Personal Care:

1.2. Major Players in FMCG sector

The top ten India FMCG brands are:

6. Asian Paints (India)

1.1.1. Hindustan Unilever

 Subsidiary of Unilever, one of the world’s leading suppliers of FMCG

 One of India’s most trusted brands

1.1.5. ITC Limited

1.1.8. Parle Agro

 Parle Agro, today, is a Rs 2,000 crore (US$ 319.43 crore) organization.

1.1.9. Procter and Gamble

 Ranked No 25 among the 'World's Most Innovative Companies'

1.3. Key Growth Drivers and Industry Overview

1.3.1 Growth Drivers

1. Increasing Disposable Income Levels

2. Shift to organised market

1.3.2. Market size

1.3.3. Growth Opportunities

1. Major players of consumer products have a strengthened distribution network in rural

1.3.4. Key Challenges

The following are challenges faced in the sector:

CHAPTER 2 : LITERATURE REVIEW

2.1. What is Strategy

2.2. Industry Analysis: Porter’s 5 Forces

Threat of New Entrants

Supplier Power Bargaining power of

1. Industry Rivalry: High

2. Bargaining Power of Buyers: Moderate

3. Bargaining Power of Suppliers: Moderate to High

4. Threat of New Entrants: Moderate to High

5. Threat of Substitute Products: Low to moderate

2.3. Planned or Emergent Strategy? How to form Corporate Sustainability

Planned Strategy Making

Emergent Strategy Making

2.4. Competitive Advantage

Competitive advantage is obtained when an organisation develops or acquires a set of attributes

INBOUND OUTBOUND MARKETING

Generic Competitive Strategies:

2.5. Green Consumers and Green Products

2.6. Consumer attitude towards environmentally friendly products

2.7. Strategic Planning of Patanjali

CHAPTER 3 : PATANJALI – A CASE STUDY

 The foundation on which this organization was built

3.1. Foundation of Brand Patanjali

3.2. Evolution of Patanjali’s Business Model

3.2.1 Entry Strategy of Patanjali

3.2.2 Strategy Formulation:

The Patanjali brand architechture holds three promises-

1. These are quality products at a lower price than competitors

3.2.3 Strategic Alliances:

3.3. Value Chain

3.3.1. Distribution Network

3.4. Pillars and Brand Communication

Patanjali has used different promotion strategies as follows:

3.4.1. Herbal & Organic Products

3.4.2. Religious & Spiritual Connect

3.4.3. Nationalised Products

3.5. The Threats & The Controversies

3.6. Product Portfolio