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This story is about how the Acharya Balkrishna and Baba Ramdev run by Patanjali has transformed the Indian FMCG (Fast Moving Consumer Goods) sector. Patanjali products are based on the principle of Ayurveda, an ancient medical science which was developed in India thousands of years ago. Ayurveda literally means the science of life (Ayur = Life, Veda = Science.) Patanjali is mainly into economically producing daily use items ranging from Ayurvedic health supplements to food sourced from locally available raw materials. They focus on Indian traditional wisdom to solve present day health issues which is based on the idea of balance in bodily systems, herbal treatment, and yogic breathing.
Founded in 2006, Patanjali has now become the fastest growing FMCG Company in India (according to a CLSA report.) This paper highlights the key reasons behind the phenomenal rise of Patanjali in the Indian FMCG landscape.
The primary reason for the high acceptance of Patanjali products among the masses is for its Cost and Marketing innovations. During the interview with Mr. S. S. Yadav, he emphasized that Patanjali products carry a profit margin of a mere 2%. As a result, most of the products are cheaper than their competitors. The reason for such a low margin is that the company’s aim is not to make profit but to serve their customers by providing natural and effective products at a more affordable rate.
Mr. Yadav says, “The retail shop owners of Patanjali, be it Patanjali Ayurveda, Patanjali Chikitsalaya etc. are not profit making entities but are trustees of Patanjali. We are the ones who were treated for life-threatening diseases using Baba Ramdev’s Yoga therapy and medicines. We voluntarily chose to help Baba Ramdev do the same with other people in our own small way of selling Patanjali products.”
Mr. Yadav also highlighted that they have strict Quality Control procedures and a dedicated R&D department. Their production does not start before the right quality of raw materials are ready to be used. Before Patanjali was started, Baba Ramdev used to sell his natural products on a bicycle.
Till now, Patanjali has utilized little commercial advertising as the publicity is mostly through word of mouth, capitalizing on the yoga sessions held across the region. Baba Ramdev has been hosting Yoga Camps even before Patanjali was started. In 2003, when Aastha Channel started featuring Baba Ramdev in its morning yoga slot, people across India became aware of Yoga, Pranayam and its benefits. There was a huge increase in the number of followers of Baba Ramdev. Seeing the opportunity here, Acharya Balkrishna and Baba Ramdev used this medium to market Patanjali products. This worked because the inspiration in having people adopt Yoga and Patanjali products was the same, which is, to harness nature to gain health benefits.
Another fact that adds a social appeal to Patanjali products is, as stated by Mr. Yadav, Patanjali aims to utilize the profits earned to construct schools for children in poor villages across the country where the basic education needs are yet to be met.
As they plan to expand in the near future, Patanjali is in conversation with McCann and DDB Mudra. Mr. Madhukar Kamath (Group CEO and MD, DDB Mudra) and Mr. Prasoon Joshi (Chairman, TAG – Sister Concern of McCann) have also confirmed the initiation of the same.
Patanjali Ayurved Ltd was established in 2006 by Acharya Balkrishna. His main inspiration for this was the celebrated yoga guru Baba Ramdev who is a very vocal supporter of Swadeshi, Yoga and Ayurveda. The main aim of Patanjali Ayurved Ltd was to produce ayurvedic products by utilizing the latest technology so that it would be up to the same scientific standards and efficiency as other allopathic products. Thus, the biggest source of inspiration was to produce a perfect marriage of latest science and ancient wisdom of Ayurveda.
Another motivating factor for Patanjali Ayurveda when it started was to bring the rich Indian heritage of Ayurveda to everyone’s doorstep. Anyone who has listened to Baba Ramdev at his camps and sessions knows his deep-rooted belief in the supremacy of ancient Indian knowledge including Yoga and Ayurveda. However, most of the Indian population today imitates the west and consumerism has led the youth of today towards fondness of unhealthy food, products and lifestyles.
The established idea was that the multi-national corporations which dominate the Indian FMCG markets offer superior goods even when they sold products at high prices due to their promotional spending and Indian products were assumed to be low quality. This meant that a lot of people were paying higher prices or were not able to afford products which should be within their reach. Thus, bringing good quality products which were low priced was a hugely inspiring factor behind Patanjali Ayurved Ltd.
Acharya Balkrishna has stated that focusing on needs of the people was the purpose of the company. As a result, Patanjali Ayurveda started primarily by producing medicinal products because the people suffering from ailments and diseases are the most affected by not being able to afford expensive products. Slowly, as it became an established name in the market due to its high quality products, it expanded its presence in the FMCG sector and started producing cosmetics and food products.
The main goal of Patanjali Ayurveda can be thought of as being guided by consumer demands and not focusing on their own commercial benefits. They surround themselves with people and understand their sentiments, needs and desires.
When Patanjali Ayurveda started, the founders never thought it would become such a large entity in such short span of time. Their dream of making high quality Ayurvedic products and benefits of Yoga available to everyone is being realized with each step the company takes further on its path of success. The claim is that they always aimed to serve the country – the business happened accidentally.
Patanjali Ayurved changed the way that fast-moving consumer goods business was viewed in India. Hence, it is turning quite a few heads abroad as well due to its unique but widely successful business model of bringing good quality products at a very affordable price within reach of the average household.
The face of Patanjali, as mentioned earlier, is Baba Ramdev who is very popular among the masses and is followed by many yoga enthusiasts and practitioners. He speaks frequently in favor of “Swadeshi” (Made in India) and of following the goodness of Indian culture and Indian-made products. As his views are subscribed by many who listen to him daily on national media (television, radio, social media etc.), he has successfully connected the image of Patanjali Ayurved and its products to modern day ‘Swadeshi.' Promotion and endorsements of the products by him has led to the people believing in the quality and purity of the products. Many also believe that these products are better, cheaper and more beneficial for them than their competitor’s products.
As a result many people have turned towards Ayurvedic products, Yoga and the healthy lifestyle promoted by Baba Ramdev and away from junk food, unhealthy daily routines and a sedentary lifestyle.
Apart from the benefits that Patanjali Ayurveda has brought into the lives of its customers through the goodness of Ayurveda and their products, it has also had a huge impact on the way FMCG marketing, promotion and advertising is perceived. It has made history by achieving the success that it has with negligible Advertising and Promotional spending and still becoming the most diversified FMCG player in India. It has surpassed listed companies like Zandu and Jyothy Laboratories and did what they could not do, i.e. reach the sales milestone of ₹ 2,030 crores. By doing this, Patanjali Ayurved has broken a lot of pre-conceived notions about marketing to the typical Indian consumer. In this case, without any extra money spent on advertising and simply through the endorsement of a yoga guru, masses have adopted Patanjali Ayurved’s products.
Through our interviews, we learned that every Patanjali Ayurved store has a ‘Vaidya” – a doctor with a Bachelor of Ayurvedic Medicine and Surgery (B.A.M.S.) degree. Anyone can come in for a free consultation and they are then recommended Patanjali’s products to cure their problems. These doctors are trained each year at the Patanjali Ayurveda Centre in Haridwar about the new products they have released and their medicinal properties. This process has reduced the gap between the doctor and the medical store and helped convert patients into customers.
We also learned that the major tool of marketing that came to Patanjali Ayurveda’s aid was word of mouth promotion. Due to the company’s faithfulness to its motto of never compromising quality, they slowly developed a loyal customer base who swears by its products.
Today, Patanjali Ayurveda is forging ties with entities like DRDO to bring useful innovations to light that lack widespread public adoption even though they are beneficial to the customers. This shows the range of impact that it has already created in society as well as how forward thinking the company is in terms of serving their customers.
The team at Patanjali don’t focus on profits they focus on revenue, as stated by the Group MD Mr. Acharya (Ref.) There might be a few products which run in loses, but only as long as the whole initiative is running sustainably. Baba Ramdev says the motive of setting up the organization is in being fulfilled. Now it plans to expand exponentially, focusing on 6 big product portfolios to drive the growth which include Kesh Kanti (Hair Care), Breakfast Range, Dant Kanti (Oral Care), Noodles, Ghee and Chyawanprash.
Patanjali Ayurved has changed the face of business and the way customer acquisition was done previously. Its revenue is in excess of ₹2500 crore for 2014 and 2015. They have increased their outlets to 4,000 in 2015 along with selling their products online. They have proved that there is a successful business model as an alternative to the aggressive advertising which leads to high product prices. Their focus on quality instead of promotion and serving the people has proved that the customers appreciate being offered high quality products. Following the same model they have outstripped established players in the market who can now take a leaf out of Patanjali Ayurveda’s book.
Patanjali Ayurved has opened a doorway for the general populace to obtain high quality, ayurvedic products at a fraction of the price that they were offered before. The entire Patanjali brand has raised awareness among the public regarding their health and how their daily habits actually contribute to their deteriorating health. It has introduced them to a healthy lifestyle that has only improved their acceptance of Ayurveda and Yoga in their daily lives and practices.
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Mr. S. S. Yadav, Sanchalak