Objective of the study: To analyse the rise of Patanjali Ayurveda Ltd.

, its strategies, feasibility

in long run and its impact in FMCG sector.

Executive Summary

FMCG is one of the largest sectors in the Indian economy. It is dominated by the household
and personal care segment, accounting for 50% of its overall sales [1]. Today, with numerous
alternatives available, individual FMCG brands are finding it difficult to hold on to
their customer base. In such an intensely competitive market, Patanjali has been successful
in establishing its mark not only in India but overseas as well.

Patanjali Ayurveda Ltd. (PAL), founded by Acharya Balkrishna and Yoga Guru Baba
Ramdev in 2006, has emerged as one of the prominent leaders of FMCG companies in a short
time span of 12 years. It has beaten giant FMCG companies like Nestle, P&G, and various
other MNCs. People have been lured towards Patanjali's products due to its Swadeshi factor,
reasonable prices, and availability of a well-diversified product portfolio. The goodwill of the
face of Patanjali – Baba Ramdev and his vision of making India an economic superpower on
multiple levels besides yoga have acted as a catalyst in its success. PAL’s single brand strategy
and strong distribution channel has helped it to emerge as a distinct brand among other
Ayurveda giants like Hamdard and Baidyanath.

Under the unified and undivided leadership of the founders, PAL understood the market's
need and fulfilled it efficiently. Studying PAL would give us more insights on the application
of demographic, psychographic and segmentation strategies that created high demand for
its product in the market.

While the company was continuing to climb up the ladder, it suffered a hit in the financial
year 2017-18, where its sales plunged by 10%, when the company predicted a 100% increment
in their sales [2]. We would like to explore the reasons that impacted the company’s growth
to understand the dynamics of the market.
 TABLE OF CONTENTS

Introduction
The Company – Mission/Vision
Growth of Patanjali in FMCG sector
Organizational Structure

Industry Analysis
Industry Competitors
Potential Entrants
Availability of Substitutes
Supplier Power
Buyer Power

Situation Analysis
Company Analysis – SWOT
Competitor Analysis – Framework
Consumer analysis – identification of need, decision making, cultural social and
personal influences
Context – Micro & Macro
Collaborator
Channels
 INTRODUCTION

The Company
Patanjali comprises of two divisions - Patanjali Ayurveda Ltd. (PAL) which is a registered
manufacturing company and Patanjali Yogpeetha Trust (PYT). PYT is a registered charitable
trust - a part of Divya Yoga Mandir Trust, Kankhal, Haridwar.

Patanjali Ayurveda Ltd. was established in January 2006 by Acharya Balkrishna and Yoga
Guru Baba Ramdev with the vision of creating a healthier society and country through Yoga
and Ayurveda. It is an Indian consumer goods company with manufacturing units and
headquarters located in the industrial area of Haridwar with the registered office in Delhi. It
started as a Private Limited Company and was converted to a Public Limited Company in June
2007. Its mission is to make India an ideal place for the growth and development of Ayurveda
and a prototype for the rest of the world. It intends to bring about urban & rural development
in India by creating a healthy society. Their product line is also in sync with the same. They
consider farmers as their main assets and source their raw material from them. The company
takes various initiatives for farmers to raise their income and provide surety towards the sale
of their produce.

Product Range
Patanjali has a wide variety of products based on Ayurveda. It has five broad categories of product
offerings:
 Food and beverage products-119
 Healthcare- 210
 Cosmetics and personal care-86
 Homecare essentials-30
 Books and video CDs -137+118

Organization Structure
Patanjali Ayurved Limited has Divisional structure which is laid out in a hierarchical
organization format. The Board of Directors has the three founders of the organization, Swami
Acharya Balkrishna, a charismatic multifarious personality who is also the Managing Director
of the company. Swami Muktanand and Sri Ajay Kumar Arya hold the position of the Directors
of the company. Baba Ramdev, the face of Patanjali marketing campaign is the Ambassador
for the complete brand. Though, he does not hold any stake or decision-making role in the
organization. Mr. Ram Bharat, the inconspicuous and informal Chief Executive Officer of
Patanjali, who is also the brother of Baba Ramdev is the head of all the operations from finance,
logistics, and other departments. Despite a strict hierarchical structure, the designation is not
very formalized within the organization.

Growth Story
Even though the company enjoyed a market growth better than any other FMCG companies
in the last decade, the last financial year (2017-18) showed a negative slope to the graph and
its sales plunged by 10%.
 Year Revenue in Cr Growth (%)
2009-10 163
2010-11 317 94
2011-12 446 41
2012-13 850 91
2013-14 1200 41
2014-15 2000 67
2015-16 5000 150
2016-17 10561 111
2017-18 8135 -10

Customer Value
1. Functional Value: Patanjali has developed an extensive product line satisfying all the
basic needs of the customer under one roof. Hence giving a Functional Value.
2. Experiential Value: Keeping Yoga and Ayurveda as a central theme, Patanjali under
the leadership of Yoga Guru Baba Ramdev aims to create experiential value for the
customers.
3. Economical Value: Patanjali Products are cheaper compared to the respective
equivalent competitors in the market.
4. Social Value: Baba Ramdev brings people under one roof to perform Yoga, hence
creating a Social value.

References:
https://patanjaliayurved.org/vision-mission.html
https://www.google.com/search?q=patanjali+growth+story&rlz=1C1CHBF_enIN854IN
854&tbm=isch&source=iu&ictx=1&fir=JqKtQ7x_pNKSTM%253A%252CCwm6UqGV2
ZzIUM%252C_&vet=1&usg=AI4_-
kTaK8Qkjjn032MZpUlq9Xe0k3ePwg&sa=X&ved=2ahUKEwib5tyyq8njAhVJqo8KHdD5
DicQ9QEwAnoECAgQBg#imgrc=JqKtQ7x_pNKSTM:
https://www.jansatta.com/business/baba-ramdevs-patanjali-losing-billions-every-year-
sales-plunged-10-per-cent-to-rs-81-billion-rupees/1064995/
http://www.vedicgiftshop.com/patanjali-divya-products/patanjali-divya-products-price-
list/#toggle-id-2-closed
http://stellarix.com/fusce/a-report-on-patanjali-ayurveda/
 INDUSTRY ANALYSIS

FMCG is the fourth largest industry in India. The high penetration of FMCG products in rural
areas is one of the reasons for recent high growth as the saw 16% increase as against to 12% in
urban areas. With an increasing youth population and disposable income, their purchasing
power has been increased. With technological innovation and increase in awareness, FMCG is
focussing customization and innovation to satisfy its customers’ needs.

To study the dynamics and underlying competitive factors of industry in depth, we are using
porter’s five forces analysis, the details for which are as follows:

Industry competitors: HIGH Threat

Patanjali faces high competition from both organised as well as unorganised sectors in
FMCG. The top 6 competitors in packaged food and personal care segment are Dabur India,
P&G, Marico, Nestle, HUL, Himalaya Herbal Healthcare. The FMCG market is highly
fragmented and hence, there are huge number of players, small as well as MNCs that are
trying tio capture the market through various strategies. In herbal healthcare segment, it
faces competition from already established brands like Baidyanath and Hamdard. The
established brands keep on coming up with new strategies, technologies and innovations to
enhance and promote their products and hence, it is very difficult for a company to gain
market share in any segment.

Potential Entrants : MODERATE Threat

There are high entry barriers in FMCG sectors due to significant investment required to
setup the firm. The available distribution channels have already been saturated by already
established brands. Other potential barriers like high FDI regulations, strict licensing rules,
food security bill, and government service and tax makes it more difficult for new players
to establish their firm. Patanjali provides budget friendly herbal products that are easily
accessible to all the segments of society. It’s very difficult for new entrants to achieve such
position with positive margin ratio. The potential players have done a lot of promotion to
build their brand equity and have expertise to achieve economy of scale which is very
difficult to achieve by new entrants. Though the opportunities to enter this market are low,
availability of raw materials and labor at low cost favors entry into this industry and hence,
pose low to medium threat to Patanjali.

Availability of Substitutes: HIGH Threat

There is a large variety of products available in market that offers the same functional values
as by the Patanajali products. Since the point of differentiation provided by Patanjali is not
very unique and several other brands like Dabur and Himalaya offer the same parity, there
is high threat of substitutes. Customer’s choices can easily be influenced by lower costs and
high promotions. This creates high competition among firms as the switching cost for
customers is nil. Homeopathic and allopathic industry also posess high threat to healthcare
segment of Patanjali as its an highly organized sector that uses multiple strategies to sell
their product. It exploits the lack of awareness among people about Ayurveda and provides
incentives to professionals to prescribe their medicine.
Supplier Power: LOW Threat
Suppliers have low power in FMCG market as big brands drive the market cost and have
the power to select the suppliers at selected prices. Suppliers don’t have much power of
negotiation due to high number of fragmented suppliers in market. There is very low cost
of switching involved for established brands to switch their suppliers. Patanjali has it a own
herbal gardens to reduce its dependability on suppliers. However, some rare herbs that can
be harvested in a particular climate gives the suppliers a high negotiation power.

Buyer Power: HIGH Threat

Buyers(customers, dealers, wholesalers, retailers) possess high threat to the FMCG
industry as they have high buying power. Since the PODs provided by Patanjali are low,
there is high number of substitutes available to the customers. Buyers are highly price
sensitive and look for high value gain, they easily switch to the products which maximizes
their satisfaction according to their budget. Healthcare segment faces high threat as
Ayurveda based treatments takes time and often looked up as a risk taken. Hence,
customers switch to allopathy or homeopathy to minimize the risk.

SITUATION ANALYSIS
To understand the dimensions of company, customers, external players, and competitors, we
have performed the 5C’s analysis as follows:

Analysis of the Company

To identify the critical factors affecting the firm, we have done the SWOT analysis for
Patanjali:
Strengths
 Brand Ambassador: One of the reasons for Patanjali’s quick popularity and
wide acceptance can be credited to its brand ambassador Baba Ramdev. High
reputation and recognition of Baba Ramdev among Indian citizens helped
Patanjali not only to get easy acceptance among the consumers but also to be one
of the trusted brands.

 Made in India: Patanjali has very nicely used Swadeshi campaign to its profit
and asked Indian consumers to discard foreign products and support Indian
products to help grow the Indian economy. Intense patriotism among Indians
seems to have helped Patanjali in this Swadeshi moment along with
Government’s intense campaigning of Make in India.

 Going Natural: Patanjali’s focused production of Ayurvedic and Herbal product

has helped Patanjali in two ways:
i. India has long practised traditional Ayurvedic, Siddha medicinal systems,
and hence, people are very closely related to natural products. This has
helped Patanjali to make room in the consumer’s appetite easily.
 ii. India has a good portion of dense green forests, providing easy access to
Patanjali to a variety of naturally grown medicinal seeds and plants.

 Strong Distribution Channels: Patanjali has access to more than 10 lakh outlets
(https://www.bloombergquint.com/business/patanjali-looks-to-expand-its-reach-
to-20-25-outlets-by-this-year-says-baba-ramdev ) in India which includes
Patanjali’s Chikitsalayas, Arogya Kendras & Swadeshi Kendras, and has
partnered with E-commerce companies including its online products store. It has
also partnered with Medical pharmacies like Apollo Pharmacy to sell its products
(https://www.thehindubusinessline.com/companies/pittie-group-ties-up-with-
apollo-pharmacy-for-distribution-of-patanjali-products/article8537060.ece).

 Low-Cost Products: Generally Patanjali products are priced lower than it’s
competitors products which Patanjali an upper hand in the consumer market.
Patanjali directly buys raw material from farmers at a lower cost and also usually
reduces selling cost by directly selling through its retail stores.

Weaknesses
 Single point collapse: As Patanjali’s image is dependent on Baba Ramdev, this
may be a single point of failure for Patanjali. If at any point Baba Ramdev wishes
to leave Patanjali, there is a chance of whole brand going down.

 Low Margins for Distributors: As Patanjali’s current focus is to capture the

market to the maximum extent possible and hence, it has priced its products at a
much lower cost, which might upset its distributors.

 Poor Supply Chain: In the long run, lower price strategy to capture market may
not work in favour of Patanjali because Patanjali might not be able to sustain in
the long run whereas other established FMCG brands will give high competition.
(https://www.businesstoday.in/current/corporate/patanjali-revenue-plunges-first-
time-in-5-years-over-poor-supply-chain/story/293251.html)

 Excessive Product Diversification: Patanjali has launched too many products in

such a short span. Not all the products launched by Patanjali are generating
revenue, but Patanjali continues to produce these products leading to lower net
revenues.

Opportunities
 Targeting Younger Generation: Till now Patanjali has targeted 40+ aged people,
there is a great opportunity for Patanjali to attract the younger generation by
product innovations.

 Targeting Premium Market: Patanjali has the potential to attract the premium
market as it has got the trust and also established itself as a brand which can deliver
a quality product.
  Global Expansion: Due to increasing awareness of Ayurveda among people
overseas, Patanjali can tap into the Global market without facing much
competition.

 Diversification into other Product Lines: Patanjali has the potential and market
availability for exploring new products may it be lifestyle products, apparel
products or investing and promoting aggressively in organic farming sector.

Threats
 Increased Competition: Big FMCG companies like HUL, Dabur and P&G can
easily invest heavily in the marketing of their product in the Herbal and Natural
sector and cater to consumer’s needs created/identified by Patanjali. Possibility of
new entrants like Sri Ayurveda can further intensify the competition faced by
Patanjali.

 Raw Material sourcing problem: Patanjali sources its raw material from local
farmers at a lower cost. There may be a case of poor harvest or other factors
affecting the harvest in which case the Production may get affected. Also Big
Companies may offer more to the same farmers disrupting sourcing channels for
Patanjali.

Analysis of Customers
To analyse customers, we need to understand two primary activities involved:
understanding the consumer needa and understanding their decision making process to
fulfil their needs.
Need Analysis

Patanjali products fulfill functional, social,

experiential as well as economical needs of
its customers. Baba Ramdev being the brand
ambassador of Patanjali and its positioning
as a swadeshi product is said to be the reason
behind the success of the brand. The
company targets middle-class and lower
middle-class segment which forms 46.15%
of the entire population. Yoga enthusiasts
form a major chunk of Patanjali’s customer
base. Also, nowadays people are moving
towards a healthier lifestyle, which has
attracted the younger generations towards Figure 2
Patanjali products.
The health benefits offered by Patanjali products provide functional value to the consumer.
According to the survey carried out by us, 50.4% people agreed that they use Patanjali
products due to the Swadeshi factor or because of Baba Ramdev’s goodwill face i.e. the
products fulfils their social and experiential needs. 10.4% of people surveyed agreed that
low price of commodities is also a factor for choosing the Patanjali brand over others.
Hence, Patanjali products caters to the economic needs of its customers as well.

Decision Making Process Analysis

 Need Recognition
The need for pocket-friendly and good quality FMCG products among the middle- and
lower-income groups triggered the establishment of Patanjali. Although brands like
Dabur, Emami and Himalaya were offering natural products in the market but Patanjali
integrated the segment and offered a wide range of products to its customers and hence
gathered a large customer base for its products.

 Pre-purchase Information Search

Patanjali got a strong word of mouth marketing from the ardent supporters of Baba
Ramdev. Using Baba Ramdev to advertise its products who is synonymous to Yoga and
is largely associated to Indian healthy lifestyle has helped Patanjali to reach out to a
large no. of customers in India as well as at an international level. According to our
survey 52.8% of the customers get information on various Patanjali products and 28.8%
come to know about them through their relatives and friends.

Figure 3

Hence if we can assign the following purchase related roles in buying Patanjali
products:
Initiator: Someone who wants to switch to a healthy lifestyle or is looking for good
quality products at a low cost.
Influencer: Advertisements on television, friends and relatives who are using the
products can give a favorable or unfavorable feedback influencing the customer’s
decision.
Decision Maker: Generally the one who pays is the final decision maker, it can be the
buyer or the head of the family as seen in most Indian households.
 Buyer & User: Patanjali offers products which are bought by a family member and
then used by the entire family, for example – Dantkanti, atta noodles, flour etc.

Evaluation of Alternatives
This involved analyzing which attributes led to the buyer deciding for a product over its
competitors. Patanjali differentiated itself from other products due to its low cost, the
Swadeshi feeling, by offering diverse products ranging from daily needs to beauty to health
and wellness, great advertisement with Baba Ramdev as its brand ambassador and
establishing a connection with its customers as a means to healthy lifestyle.

Purchase Decision
There is a large customer base of Patanjali products who are followers of Baba Ramdev
and are brand loyalists, for these customers the purchase decision is habitual buying. For
the upcoming youth generation who wants to switch to a healthier lifestyle, the purchase
decision has high involvement where they look into products ingredients and consider
feedbacks from the previous buyers. Also, there are customers who buy its products for
trial, these purchase decisions are made on impulse which are influenced by
advertisements and attractive packaging.

Post Purchase Evaluation

In a short period of time Patanjali has occupied a large market share in the FMCG industry
which proves that post purchase feedback of customer is favorable. In the survey
conducted by us 51% consumers are satisfied with the Patanjali products.

Our survey shows that 35% of customers were delighted by their shopping experience at
a Patanjali outlet.
 The appreciation received by Patanjali in a short period of time has contributed in word
of mouth marketing, which is why Patanjali has very low customer cost.

Analysis of Context
Business opportunities are highly affected by the external context. To understand the
factors in the world that impact a business model, wehave analysed six external
environment factors as follows:
Demographic Environment
Indian FMCG market had been dominated majorly by the processed goods. Even though
companies like HUL had herbal and ayurvedic product lines, they weren’t promoted by
the companies to a greater extent. Being aware of the side effects of the processed
products, Indian herbal market demanded a growth. Many people wished to adopt to a
healthier lifestyle. Patanjali Ayurved came up as a company which would tap the
requirement of such masses.

Economic Environment
Patanjali Products are cheaper compared to the respective equivalent competitors in the
market. Table here below depicts the same. Hence creating an Economic value.

Socio Economic Environment

The Yoga lessons given by Baba Ramdev in the programs on Aashta channel created a
social value among the people. Huge masses participated in the Yoga sessions conducted
by Baba Ramdev. They also started forming groups and perform yoga. People easily
adopted to the products because of the Ayurvedic contents.
 Political/Legal Environment
In 2011, Baba Ramdev asked the government to add powers to the Jan Lokpal Bill. He
went to Delhi for an Anshan. Due to some legal reasons the Anshan did not go
successful, but the huge masses attracted by the event displayed the loyalty of people
with Baba Ramdev, which reflects with the company also.

Technology Environment
The company has a zero-wastage technology. Whatever is left after the usage of raw
materials is further processed to be used in some other product manufacturing. For the
entire product ranges manufactured in the Patanjali Factories, latest technology
machinery are used to avoid energy wastage.

Natural Environment
All the raw material required for the processes is procured from the farmers in India.
Because crops are seasonal, it creates a lot of dependency. Storage of raw material
becomes an important concern. Patanjali has therefore leased 1.2 million sq. ft for
warehousing in 20 cities.

Analysis of Collaborators
The principal production facility operated by the organisation is the Patanjali Food and
Herbal Park at Haridwar. However, Patanjali has collaboration with various organisations
and retailers for production, distribution and services. Broadly the collaboration of
Patanjali could be classified into the following:

Suppliers: PAL buys organic and herbal produce directly from farmers. JHL
Svendgaard Limited produces ranges of toothpaste for PAL.

Service Providers: Patanjali launched a BSNL (for sim card).

Distribution Network: Patanjali has several retail stores covering the sales and distribution.
Also some of the sales is conducted through Apollo Pharmacy, Future Group’s Big Bazar,
Reliance Mart and Local Kirana Stores. Patanjali has recently started to explore the
possibilities in e commerce platform and has made agreements with top e-retailers and
aggregators giants like, Flipkart, Amazon, Paytm Mall, BigBasket, 1 MG, Grofers
Snapdeal and Shopclues.
References:
https://patanjaliayurved.org/vision-mission.html
https://www.google.com/search?q=patanjali+growth+story&rlz=1C1CHBF_enIN854IN
854&tbm=isch&source=iu&ictx=1&fir=JqKtQ7x_pNKSTM%253A%252CCwm6UqGV2
ZzIUM%252C_&vet=1&usg=AI4_-
kTaK8Qkjjn032MZpUlq9Xe0k3ePwg&sa=X&ved=2ahUKEwib5tyyq8njAhVJqo8KHdD5
DicQ9QEwAnoECAgQBg#imgrc=JqKtQ7x_pNKSTM:
https://www.jansatta.com/business/baba-ramdevs-patanjali-losing-billions-every-year-
sales-plunged-10-per-cent-to-rs-81-billion-rupees/1064995/
http://www.vedicgiftshop.com/patanjali-divya-products/patanjali-divya-products-price-
list/#toggle-id-2-closed
http://stellarix.com/fusce/a-report-on-patanjali-ayurveda/