Patanjali: The Success Story

Two childhood friends, one a yoga guru and the other an expert on Ayurveda, joined hands?to create a synergistic wave which shook the industry leaders, who had been dominating the FMCG market for decades. Few know that this journey started in 1995 with a small pharmacy in Haridwar, selling Ayurvedic medicines. Ramdev Baba, as he is popularly known, and Acharya Balkrishna, both the co-founders had beliefs deeply rooted in the ancient Indian traditions of Ayurveda. They started their entrepreneurial journey with two visions:

?1. To provide quality ayurvedic medicines at affordable prices and

2. To strive towards making India self-reliant.

They started Patanjali Ayurveda in 2006 with a loan of 50-60 crore. Baba, by that time, had become a household name in India, as a yoga guru and had a strong personal brand which revolved around yoga, ayurveda, wellness and natural products.

There was a huge untapped market for natural and wellness products whose potential till then had not been gauged by the existing players. Patanjali rode on this wave of wellness, yoga and Ayurveda.

People were increasingly becoming conscious of their health and wellness. There were?companies like Dabur which had been around for decades in the ayurveda segment but couldn’t tap the ayurveda market the way Patanjali did. Patanjali stuck to Ayurveda till?2011 and revolutionized the way people looked at wellness in all its forms, be it yoga or natural herbal products. For instance, they enunciated the benefits of natural products like gooseberry(amla) and aloe vera, which people till then rarely used. The market accepted Patanjali’s products with open arms and Patanjali started earning the trust of the people as a company which puts the interest of the consumers first by producing low-cost natural products, and this positioning of Patanjali was going to prove to be its foundation stone for its future?ventures.

Patanjali made its foray into the FMCG sector in 2012 and took the market by storm, churning out new products and entering new segments at an astonishing pace, with its unprecedented and unique umbrella brand strategy. While all the companies do extensive market research before entering new categories, Patanjali would launch several brands in multiple segments simultaneously, defying all conventional wisdom. Perhaps Patanjali could pull this off because of their deep understanding of the needs of the consumers, which they had acquired during their years of interactions with people, as a yoga guru and as an ayurveda acharya.

Patanjali produces a line of products in the FMCG sector and has shaken the existing market leaders. The yoga monk has given the marketing gurus a run for their money. The monk had brewed a giddy mash-up of quality, health and patriotism, which the country embraced with open arms.

Patanjali has been growing at a stupendous pace since its inception and today its turnover is app.32000 crore. The company boasts of a huge product portfolio of 500 products, across FMCG categories, from biscuits to noodles to health drinks.

The brand’s rapid rise is a testament to its unique business model, product range, and marketing strategies. Let’s delve into the factors which made Patanjali a force to reckon with, in the Indian FMCG and the Ayurveda market:

Product:

Lifestyle diseases like diabetes, hypertension etc, were on the rise and therefore there was a growing concern among the people about their health. Meanwhile, Patanjali’s face Ramdev Baba was raising awareness among people regarding the importance of yoga, fitness and wellness. Patanjali felt the pulse of the market, there was a huge potential for healthy, organic, chemical-free products and the company gave the market what it was craving for.

Providing high-quality, natural, organic and chemical-free products has been Patanjali’s key differentiator. Patanjali capitalized on the growing demand for natural and herbal products.

Earlier, there was a notion that Ayurveda was meant only for the consumption of the elderly and the sick, Patanjali shattered this myth, coming out with products for all age groups and segments.

The company came up with innovative products. Its initial success came with brands like Gooseberry and aloe vera juice, which people then rarely used. The company communicated their health benefits to the consumers, and millions adopted the consumption of these products, which lived up to the expectations of the benefits promised.

Such has been its impact that now its competitors have been compelled to launch herbal and ayurvedic product lines.

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Price:

It is incorporated in the company’s vision to provide quality products at affordable prices, and they have lived up to their promise. Their brands are usually priced at 10-15% lower than the competitors and this attracts the price-sensitive customer. And because of this, they have been able to infiltrate into all market segments.

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Place:

Patanjali has over 15000 exclusive stores, again an unprecedented phenomenon in the FMCG space. It has over 3000 Patanjali chikitsalayas (clinics) apart from being present at over a hundred thousand retail stores including big retail chains like the Big Bazar. The?retailers are compelled to keep Patanjali’s brands despite the low margins they offer because of the tremendous demand-pull. It also has tie-ups with e-commerce platforms.

It’s evident, Patanjali’s distribution channels are very different from the traditional distribution channels, and which has worked to its advantage.

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Promotion:

Ramdev Baba, who is a household name in India, has millions of followers in the world. He is instrumental in popularizing yoga all over the world and is the brand ambassador of Patanjali. He commands tremendous trust and respect, and therefore Patanjali has never missed the endorsement of its brands by any other celebrity. Patanjali has leveraged Ramdev’s strong Personal Brand to build trust among its customers. Patanjali’s natural, nutritional, chemical-free products perfectly align with the Personal Brand of Ramdev Baba.

Baba is also known for his patriotism and his philosophy of ’Swadeshi’(indigenous/homegrown). Patanjali has created a loyal market for itself which is health-conscious, price sensitive and believes in the philosophy of consuming home-grown products.

Word-of-mouth publicity has contributed phenomenally to Patanjali's success. Baba’s fervent followers, who were the early adopters of Patanjali’s brands, have been rendering free and positive publicity for its brands. Imagine how immensely Patanjali is benefitting, with millions of people advertising its brands for free. It’s estimated that almost 20 crore people have?attended Baba’s yoga classes, imagine the amount of reach Patanjali has.

Moreover, Patanjali, through its advertising campaigns, has been conveying to the people that a sizable portion of the company’s profits goes to charity, which strikes an emotional cord with the customer.

Patanjali has adopted a policy of spending a minimum amount on advertisement and uses those funds on the development of new products.

Patanjali’s advertisements focus more on informing the customers about the health benefits of its brands rather than focusing on brand recall, customers find more value in its advertisements.

It is evident, by analysing Patanjali’s 4 P's, that it has evolved its uniqueness, whether it is its brands, its distribution policy or its advertisement, and therefore has positioned itself in a way which sets it apart from the rest of the market. Ironically, it’s the market leaders, who are normally expected to set the pace, are compelled to adapt and adjust their policies to ward off the competition posed by a newcomer.

What has worked for Patanjali: Its strengths

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Branding and Trust:

Patanjali leveraged Baba Ramdev’s popularity to build trust among the consumers.

Patanjali capitalised on the growing demand for natural and herbal products.

The absence of harmful chemicals in its products was a major selling point.

The emphasis on “Swadeshi’’(indigenous) and “Ayurveda” resonated with nationalistic sentiments.

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Product diversification:

The company has been diversifying, entering new segments at an astonishing pace.

Patanjali expanded into various product categories including ayurvedic medicines, wellness products, food, and personal care.

Recently they have launched their apparel brand, and being consistent with their positioning, will be providing clothes made from eco-friendly material.

They are making an entry into frozen food and dairy, with the promise of chemical-free products.

By launching products like Patanjali Aloe Vera, Amla and Dant Kanti toothpaste, Patanjali garnered immense popularity and these three became the company’s most recognizable brands.

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Affordable Pricing:

The company offers products at prices below the competitors, challenging the established players.

This affordability attracted price-sensitive Indian consumers.

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Distribution Network:

A strong distribution network, including Patanjali's exclusive stores, Patanjali Chikitsalayas and Arogya Kendra, apart from more than 1 lakh retailers ensured wide accessibility.

Tie-ups with modern retailers and e-commerce platforms expanded its reach.

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Patanjali’s Challenges:

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Quality control:

Maintaining consistent quality at such a big scale and with such an array of products in various segments is a daunting task. The company had to recall its products on a few occasions because of quality issues.

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Competition:

The presence of multinational giants like Unilever and P&G poses stiff competition and they are responding with their product lines of Ayurveda and herbal brands.

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Distribution bottlenecks:

Managing a vast distribution network comes with logistical challenges, leading to product shortages at times.

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Patanjali’s success is rooted in its ability to leverage traditional Indian wisdom and blend it with modern consumer preferences. The brand tapped into the power of Ayurveda, yoga, and natural remedies, capitalizing on the trust and popularity of its co-founder, Baba Ramdev. The “Swadeshi” and “Ayurveda” ethos that Patanjali promoted, strongly resonated with the Indian consumers.

One of the defining factors behind its success was its product diversification. This diversification not only broadened its consumer base but also offered it an affordable and reliable alternative to established FMCG brands.

Patanjali capitalized on the growing demand for chemical-free and natural products, which appealed to health-conscious consumers and also set new standards for product quality within the FMCG industry.

Patanjali did have its share of challenges too. Maintaining consistent quality at such a scale proved to be a daunting challenge and there have been occasional hiccups, affecting its reputation. The company has also faced regulatory hurdles.

As the company continues to chart its course, it exemplifies the potential of combining ancient wisdom with modern entrepreneurial spirit, leaving a lasting legacy in the wellness and FMCG sectors.

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