Consumer Behaviour & Branding of Patanjali.docx

2017

Consumer Behavior Project Rise of PATANJALI

Table of Contents

Indian FMCG Industry

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Patanjali

1

Value Proposition of Patanjali

3

Successful branding of Patanjali

4

Key Consumer Insights

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Key Learning from Consumer Insights

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References

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Indian FMCG Industry

FMCG industry is currently the 4 th  largest industry in Indian economy. Its market size is expected to grow to US $ 74 billion by 2018 and US $ 104 billion by 2020. According to the CII-Bain and Company, “India is at the cusp of the FMCG S-curve and there is significant room to grow over the next 5-10 years. A nominal GDP growth rate of roughly 12 per cent over the next three years could signal an FMCG growth by over 15 per cent, depending on player action”.

The growth continues to be high in the rural areas with most companies developing strategies to capitalize on this tremendous growth. Companies are providing better infrastructure, increasing direct distribution and developing new products especially for the rural markets. The FMCG sector is led by MNCs as well as Indian companies. Some of the leading companies are HUL, ITC, P&G, Marico, Nestle, Dabur and Patanjali. The sector can itself be divided into 3 major segments: Food & Beverages (soft drinks, tea, coffee, snack food, dairy products etc.) have a market share of 53%, personal care (oral care, skin care, cosmetics, toiletries, deodorants etc.) has 21% while household care (soaps, detergents, utensil cleaners, air fresheners etc.) has a 12% share. The rest 15% is covered by the tobacco industry. Patanjali

Yoga guru Ramdev Baba along with Acharya Balkrishna, established Patanjali in the year 2006. The objective of introducing Patanjali as stated by Ramdev Baba is to fuel the growth of Yoga and Education and to introduce the technological advances in Ayurveda which is otherwise losing its charm. Patanjali completely surprised its competitors to become the fastest growing FMCG Company in India and grabbed a huge market share before the competitors realized the threat and responded. It had an annual turnover of about INR 10,216 crore in 2016-17 further focusing on a turnover of around INR 20,000 crore in 2017-18. The brand has established a solid hold in the North, East and West. According to Ramdev Baba, the profit from Patanjali products goes to charity. The organizers of the brand can be continuously seen targeting the major players for the harmful effects of the synthetic chemicals etc. that are used in their products meanwhile the claim is that Patanjali products are completely natural and Ayurvedic and thus are far better for a healthy life. 1

Patanjali majorly focuses on 4 business segments: Ready foods, Home care, Personal care and Ayurvedic products. The top five products that are the major contributors to its revenues are: Cow Ghee, Dant Kanti, Kesh Kanti oil, Patanjali Honey and Patanjali bathing soap. These  products are making huge dents in the profits and market shares of the leading MNCs in their segments. Product

Patanjali

Leading brand

Amul

Change after Introduction of Patanjali 

overall growth in the product category

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Amul’s share got reduced to 18% and Patanjali gained

Cow Ghee Patanjali Dant Kanti Patanjali

a market share of 10% Colgate-

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captured 4.5% market share

Palmolive

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giving tough competition to Colgate

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Consumers are shifting to Patanjali

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Marico is still the leading brand

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Patanjali gaining acceptance due to the “Ayurvedic”

Marico

Kesh Kanti Patanjali

Dabur

Honey

Patanjali Bathing Soap

image 

Dabur is still the market leader

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HUL facing tough competition in Ayurvedic soap

HUL

category due to Aloe Vera and Neem 

HUL is still the leading brand with 60% market share

The leading players in the FMCG market understood the threat quite late and have reacted to increase their foothold of the market. HUL for instance has launched AYUSH, a brand that claims to be Ayurvedic in nature, to compete against Patanjali.

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Value proposition of Patanjali

The mission of Patanjali is: “Making India an ideal place for the growth and development of Ayurveda and a prototype for the rest of the world”. Its vision is: “Keeping Nationalism, Ayurveda and Yoga as our pillars, we are committed to create a healthier society and country”.

As clearly stated in the mission and vision, Patanjali wants to create a market where the customer is inclined towards Ayurveda, natural products, wanting less synthetic chemicals and other contents. Patanjali wants to increase its customer base by providing products that meet the global quality standards and are available at affordable prices where any small deviation from the expectation of consumers (in terms of taste etc.) is overshadowed by the strong idea of being a healthier and natural product. Patanjali offers over 400 types of FMCG goods, all competing with the major market leaders. The differentiating factor is the natural, healthy and Ayurvedic nature of Patanjali products. It also produces 300 medicines which claim to treat diseases ranging from common cold to heart ailments. The final product of Patanjali is generally 20% to 25% cheaper than its competitors. Apart from  being designated as healthier, it’s also the cheaper product. Patanjali is thus following a cost

differentiation strategy to distinguish its brand from others for the masses of the nation. Patanjali has managed to develop a good distribution network within a very short period and has reached to undeveloped areas where creating a distribution network is otherwise a challenge. Although there a several big and small, national and local retail stores that sell Patanjali  products, dedicated Patanjali stores can also be seen even in the semi urban areas which is unlike

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most of its competitors. Patanjali is effectively increasing its online presence and is also locally available in countries like Nepal, Sri Lanka, Bangladesh, UAE and Saudi Arabia. The promotion that Patanjali got because of the huge fan following of its brand ambassador Baba Ramdev was enormous. Baba Ramdev already had a huge strength of followers who practiced his yoga style and used the Ayurvedic medicines that were offered. These consumers became the  primary targets of Patanjali products and converted into Patanjali loyalists without any strong effort. Others who were health conscious and inclined towards exercising slowly followed suite. Use of taglines like “Swasth Bharat, Samruddha Bharat” (Healthy India, prospered India) along

with elements of Indian culture (Joint families, Worshiping gods etc.) in its advertisements attracts the patriot within the consumers. Arguments like purchasing an MNC’s product takes money/ progress to outside nations instead of developing India again targets the patriot within a consumer. Successful branding of Patanjali

The major reason behind the rapid adoption of Patanjali products within its target segment was the pre-established huge consumer base that was loyal to Patanjali even before it was rolled out. This segment of the market, also known as cult followers, constituted of the Ramdev followers and Ayurveda enthusiasts who were already associated with Baba Ramdev by some means. This huge market segment shifted to Patanjali products in a very short time, even before the market leaders understood the threat that Patanjali posed. These cult followers then became the biggest source of mouth to mouth publicity, which is very common in the cult followers in India and is used as an attempt to attract more followers or show dominance or effectiveness of the cult by the followers. 4

The other segment that Patanjali targeted was the health conscious customer aging above 30. The decision maker for buying Patanjali products is generally a female, as can be seen by the  presence of high number of females in Patanjali ads. Patanjali targeted these mother, wives and caretakers of the family by introducing a full range of products that covered the whole kitchen as well as the other daily use items. Consumers were, made aware, of the value proposition of Patanjali using all the methods of marketing, including television commercials, online marketing,  print media, newspapers, magazines, hoardings, talk shows inviting Ramdev Baba and most importantly, the yoga rallies conducted by Ramdev Baba himself. Consumers are increasingly becoming health conscious and health problems related to high  blood pressure, increasing sugar levels and heart diseases are seeing an increase in the number of  patients. The value proposition claimed by Patanjali suits their requirements, lowers their expenses and promises a healthier life. Another key target segment that Patanjali successfully exploited was the patriotic consumers who gladly shifted to Patanjali products because they were produced by an Indian company  promoting the Indian culture and arts and claiming to be working for the development of India. The uses of  phrases like “Bhartiya parampara” (Indian culture), “Samruddha Bharat” (Prosperous India) and “Swadeshi” in its advertisements caters to this patriotic consumer who

 prefers Indian brands over MNCs.

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Key Consumer Insights

Various question were asked to several consumers, most of them users of Patanjali. Some nonPatanjali users were also interviewed to gain insights on why Patanjali couldn’t successfully

convert those consumers. Some of the questions that were asked are (Most responses translated from Hindi to English):

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Why do/ don’t you use Patanjali products?

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Can you tell the benefits you realized after using Patanjali products?

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How are Patanjali products different from other brands?

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How is ______ (a Patanjali product) different from ______ (similar product from an MNC)?

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Do you feel good/ healthier after using Patanjali products?

The responses explaining the use of Patanjali products generally were: “Patanjali products are suggested by Baba Ramdev” “Patanjali products are healthy because they are herbal and ayurvedic in nature” “I am a follower of Baba Ramdev and hence I use Patanjali products” “Patanjali products are healthy and cheaper at the same time” “ Ramdev Baba helped improve my health and hence I believe in his medicines and by extension, in Patanjali as well ” “I don’t want to risk our health and get high BP or sugar, better take precaution by using natural products” 

The brand value of Patanjali is thus based majorly upon the image of Baba Ramdev and the  perceived effectiveness of his yoga and Ayurveda in treating ailments of the people. Lower  price, inclination towards using natural products and inclination towards products Made in India were some other major points of sale. 6

On asking about the benefits or effects that were realized by the use of Patanjali products, most of the consumers told they generally felt healthier and more positive and there was nothing tangible about the benefits. Some users of the beauty products did mention a slightly softer/  brighter skin. While almost all the users said they generally felt happy after using Patanjali  products. 

The benefits that Patanjali generally offers are long term and cannot be measured but the use of its products can be associated with an internal satisfaction and a feel good factor which might even be a reason for a healthier life.

An important observation here is that most of the users claimed they use Patanjali products  because of their natural and ayurvedic/ herbal origin. When asked “How is ______ (a Patanjali

 product) different from ______ (similar product from an MNC)?” The responses of almost all the respondents were either confused and uninformed or wrong or insignificant to explain the actual differences. 

Although the consumers are health conscious while buying Patanjali products, they still aren’t aware of the true benefits (if there are any), of the Patanjali products. Almost no

consumer knows the presence (or absence) of which component makes a particular Patanjali  product more natural, herbal or healthier than a product of same category manufactured by an MNC. Some non-users of Patanjali products were also interviewed and the responses that were gathered were: “I don’t use Patanjali products because I don’t trust Ramdev Baba”

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“I don’t use Patanjali products because they are hardly different from others and its just a marketing strategy” “Patanjali is just another trick to earn money and exploit emotions of common people to earn

 profits” “My current product is satisfying all my needs and so, I don’t want to switch” 

The responses can be used to categorize non-users into two segments: The anti-Baba Ramdev customer and the already satisfied (from another brand) customer. The former isn’t

necessarily a non-believer of Ayurveda or yoga or other value propositions of Patanjali, they  just do n’t purchase because they believe that cult-culture is only for profit making and they didn’t want to help increase the cult culture by joining the followers of Baba Ramdev. The

already satisfied consumer is a loyal user of another brand and it would generally be a hard task to convince them to make a switch. Key Learning from Consumer Insights

So far the strategy of Patanjali has been to target the Cult followers and the less aware/ educated segments of the market. Patanjali has been successful in penetrating this segment of the market. The next big challenge in front of Patanjali is to maintain/ establish its dominance and gain a leadership position in various product segments. The way ahead for Patanjali should be target the remaining segment by providing information and increasing awareness regarding how their products are different from competitors and how the health benefits claimed by Patanjali are actually justified. It also needs to focus upon the long

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term effect that these products have over the short term satisfaction that the products from their competitors provide, which will be important for converting the satisfied loyalists.

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References http://www.firstpost.com/business/fmcg-growth-seen-accelerating-over-15-in-next-2-3-yrs-says-astudy-3322386.html

http://www.livemint.com/Opinion/30a5WR5HDjU8Rau68JRkgI/Patanjali-Ayurved-Of-savvy-marketingand-smart-pricing.html

https://blog.ipleaders.in/indian-fmcg-sector-new-trends/

http://www.indianmba.com/Faculty_Column/FC851/fc851.html

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