Patanjali STP Analysis.docx

Patanjali STP Analysis

Contents INTRODUCTION.................................................................................................. 3 OBJECTIVES OF THE ASSIGNMENT.......................................................................3 PESTLE ANALYSIS............................................................................................... 4 SWOT ANALYSIS................................................................................................. 5 SEGMENTATON, TARGETING AND POSITIONING....................................................7 ISSUES MARKETING NEEDS TO RESOLVE............................................................10 GROWTH PATH................................................................................................. 10 REFERENCES.................................................................................................... 11

Introduction In regards to the MCRM Group Assignment, we have selected Patanjali Ayurved Ltd., also known as PAL - a Haridwar based Indian FMCG, which has registered phenomenal growth in the last 5 years. Yoga Guru- Baba Ramdev forms this company in 1997 by collaborating with Acharya Balkrishna, a scholar of Ayurveda, Sanskrit and Vedas in 1990’s to manufacture Ayurvedic medicines. Ramdev focused on Yoga while Balkrishna assumed responsibility of spreading Ayurveda medicine. An unlikely combination of - YOGA for inner peace and FMCG for external beauty - but Baba Ramdev appears to have struck the right pose in both. Acharya Balkrishna is currently the Managing Director and major stake holder of Patanjali Ayurved Ltd (92%) but the driving force behind Patanjali Ayurved Ltd is Baba Ramdev, an ascetic and yoga guru of Indian origin. The Company was originally formed as a private limited company on 13 th January, 2006 and consequently converted into public limited company on 25 th June, 2007. It manufacturers almost 800 world class, healthy products. Currently, Patanjali is present in almost all categories of personal care and food products ranging from soaps, shampoos, dental care, balms, skin creams, biscuits, ghee, juices, honey, mustard oil, sugar and much more. After launching toothbrush, toothpaste, honey, face creams and other products in North India's open market, Patanjali Ayurved Limited launched its products in South India beginning with Hyderabad. Compared to other multi-national company products, these products would be cheaper by at least 30 per cent. The company sources products directly from farmers and cuts on intermediaries to boost profits. The objective Year Revenue (In was to empower people, particularly farmers Crores) economically through the promotion of these 2009-10 163 products. 2010-11 317 446 Baba Ramdev and Acharya BalKrishna knew 2011-12 2012-13 850 that they have created a captive market with 1,200 their efforts since last one and a half decade, 2013-14 2014-15 2,006 which values health, yoga, pranayama and 2015-16 5,000 above all brand Baba Ramdev. This captive market is health conscious, looks out for affordable products, believes in the philosophy of swadeshi (home grown) and above all considers Baba Ramdev as their ideal. When Patanjali Ayurved Ltd launched its products in the Indian retail sector, this captive market was among the first to buy and use its products. This captive market developed instant loyalty to Brand Patanjali. The company currently has a market valuation of ₹30 billion (US$450 million). For fiscal year 2015-16, Patanjali Ayurved Ltd, clocked a turnover of about Rs 5000 crore, up from about Rs 2000 crore a year earlier and Rs 1200 crore in fiscal 2013, as per the company filings and industry sources. During the current fiscal, Patanjali expects to clock a turnover of over Rs 10,000 crore; according to Aditya Pittie, CEO, Pittie Group. This marks a phenomenal 67% jump from the previous fiscal year.

Objectives of the Assignment    

To To To To

conduct PESTLE Analysis for Patanjali Ayurved Ltd. analyse the current STP for Patanjali Ayurved Ltd. identify the gaps/opportunities that the company can target fresh. propose positioning strategy for the chosen target segment(s).

PESTLE Analysis Patanjali Ayurved Ltd (PAL) has grown since its inception. Some of the factors or forces, which affected or might affect in future are analysed below using the famous PESTLE analysis. Political

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Economic

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Social

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Present political climate is favourable to Patanjali as it is close to government and it is following government initiative like ‘Make in India’ campaign. Government is promoting Ayurveda through “Ayush – Ministry” to promote Yoga, Ayurved and other traditional and complementary medicines. That gives Patanjali a huge boost as it itself claims it to be an Ayurvedic company. Government’s taxation policies affect the cost of the input products, hence affecting the final price of the products. PAL input costs increases or decreases based on the taxation policies of the government. Inflation rate affects the buying nature of consumer. With inflation rate increasing continuously, people are looking for cheaper and effective substitutes. With the brand and trust of Patanjali, it has formed the potential substitute. Since the raw materials for the manufacturing are from the natural environment and the company focuses only in retailing in India alone, the factors like fluctuating global economy and currency fluctuations have no significant impact. Implementation of Goods and Services Tax GST) will also help PAL. Higher tax rates and interest rates affect the cost of capital adversely increasing the manufacturing cost. This makes the products costly in the market. The people of India are becoming more health conscious; and want to consume organic products. Rise in healthy FMCG products from 2284.4 US $ million in 2003 to 9000 US $ million in 2016 acknowledges the above statement. This particular trend opens up the market for PAL, which offers trusted Ayurvedic products. The affordable price also helps

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Technologic al

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Legal

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Environmen tal

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them to cover the whole market size. In India, average life expectancy, which used to be around 42 in 1960, steadily climbed to around 48 in 1980, 58.5 in 1990 and around 62s in 2000. The improvement in life expectancy attributes to better diet and health consciousness among people. This particular trends enhance the scope of companies like PAL. Government has created favourable climate for R&D work in country. Patanjali has in house R&D facility; using which they are developing new products in Ayurvedic way. Few examples are as below: o For the manufacturing unit in the company, it has high frequency drier unit for quick liquefaction a fluid wed processor. o Tablet compressing device with the capacity for preparing one lac tablet per hour o High speed auto coater for coating the tablets o Utility centre has been set up in the production unit has two generators with boilers and compressors o Company has PLC controlled packing machine having capacity of 300-400 volts with automatic blister packing equipment With the help of biologists and technology, better options are being created in the company. With the help of the available technology, new herbs are being notified and being used in the new medicines. Company is also working for new farming ways. There are several rules and laws for Ayurvedic medicines and the process by which medicines are prepared: o The Medicine Central Council Act-1970, o The Drugs and Cosmetics Act 1940 and rules made thereunder o The Drugs and Magic Remedies Act 1954 and the rules made thereunder. Quality assurance needs to be fulfilled by those medicines, which are being prepared and laws are there for this process as well. The main problem, which Ayurveda has to confront, is seasonable herbs and their locations. There are many herbs, which are available in winter season, autumn season or in summer season. Some herbs are available only on the mountains at very high location and some of them are not easily identifiable. Technology can help to construct area where we can do the artificial farming for those herbs by maintaining temperature according to the herbs.

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As the company itself calls itself a Ayurvedic company, it is favourable to environment and has no side effects to people nor environment.

SWOT Analysis Strength  Low Operational Cost  Large Distribution Network  Good relation with Government.

Opportunity  Untapped rural markets  Rising income and Purchasing power of people  Export Potential

Weakness  Strong global competition.  Low export levels  Less promotion  Huge dependency on Baba Ramdev Threat  Replication of product  Infamous political attacks.  Policies related to Cultivated herbs

Strength 

Low Operational Costs: - The Company enjoys low operational costs and more operational profit percentage compared to many other big players like Ranbaxy and Sun pharmaceuticals. Sl # 1 2 3 4

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Large o

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Company

Operating Cost(Rs)

Patanjali Ayurved Ltd 72,06,071 Sun Pharmaceuticals 7,14,70,400 Cipla Ltd 6,16,14,800 Dabur Ltd 5,22, 83,000 Distribution Network: PAL has an extensive distribution network spread across the country with more than 3,790 Patanjali Arogya Kendra, 1,088 Patanjali Chikitsalya and 11,000 Patanjali Swadeshi Kendra. These outlets operate as franchisee stores opened by third parties. Patanjali Chikitsalya works as miniature clinics with specialized consultant available, which further enhances the value proposition of the outlets. In the last few years, the company has changed its sales pattern and its products are available in the open market through more than 70,000 retail outlets across India. The wide distribution network ensures ample visibility and availability of products throughout the country augmenting the sales of the company. The company has appointed around 60 super distributors across the country. The super distributors route the products to distributors who sells the products to retail shops. The change in the supply chain has led to a positive impact on the business profile of the company as

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reflected in increasing sales through ensuring wider availability of the products. Government Support: Central Government is promoting Ayurved and Yoga. Government of India has a separate “Ayush – Ministry” to promote Yoga, Ayurved and other traditional and complementary medicines.

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Strong Global Competition: PAL has been extensively doing well in India but to establish it globally, needs a lot of strategy and hard work, due to the presence of well-established players in the market like BACFO, Himalaya etc. Low Export Levels: - Presently the company is focused only in India. Extensive growth globally has many hindrances from export policies, to international rules in the field of medicines etc. Less Promotion: - Where the major companies depend on promotion for its sales, PAL has kept itself out for some anonymous reasons. The trendz and statistics have proven that many companies have helped due to promotion. Promotion will help increase its visibility in the market. Huge dependency on Baba Ramdev.

Opportunity 

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Untapped Rural Market: Though the company associates itself with rural India the market penetration of PAL is weak in such areas. The major visibility of the company is in urban areas where the people are more health conscious. A rural market share is always there to be penetrated. Rising Income and Purchasing Power: The purchasing power of people have increased. So, PAL can take a bit of liberty to increase the price. Especially in the sector where they are doing business, people can pay a bit more than what it is being sold now. Export Potential: Europe and America have always looked towards India for effective Ayurvedic products. PAL can expand globally by establishing its market even outside India. Neighbouring countries can also be a good potential.

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Political attacks: There have always been attacks from the political parties on companies for adulteration. This can hamper their main USP i.e. trust. Replication of Product: Since the product are general in recipe or components, they can be easily replicated. This can lead to many small companies to emerge and can increase competition.

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Policies: Since the company uses cultivated herbs as raw materials, any policies in future related to them can create hindrance in the growth of the company.

Segmentaton, Targeting and Positioning Patanjali Ayurveda Ltd is targeting the value conscious customers with positioning based on natural, healthy & ayurvedic product. There is no specific segmentation for Patanjali Ayurved Limited. It follows “MASS CUSTOMIZATION”. Mass customization is a marketing and manufacturing technique that combines the flexibility and personalization of "custom-made" with the low unit costs associated with mass production. Customer expectations of the service can be divided into two types:  

Desired service: Desired service is the service that a customer desires and expects to get. Adequate service: Adequate service is one in which the minimal level of service which a customer is willing to accept based on his perception of service acceptability.

The service provided by Baba Ramdev’s Patanjali is synchronizing well with the desired service expectations.

Due to the Mass Customization, Patanjali targets:  

Everyone who wants to live healthy Anyone suffering from any disease

The most important promotional activity involves yoga campaign by Baba Ramdev and the Patanjali trust. It has taken up the Social Responsibility to make people

healthy. The organization is engaged in various good activities which are of great benefit to the society. Baba Ramdev has been giving importance on pranayam and yoga dimensions to target the mass population worldwide. Patanjali Yogpeeth is fully utilizing the historical Indian roots i.e. spirituality to competitive advantage, created by Baba Ramdev, to sell its own products in the market. Baba Ramdev's Patanjali Ayurved employs penetration strategy and cost of goods is very less. He tells people not to lose hope and not to depend on costly treatments marketed by various foreign brands. The diseases for which Indian population spends is much more in hospitals. On the other side, pranayam and yoga, treat all the ailments completely with cheap and quality medicines. It is amazing, but it is claimed to be true that this is the cheapest and the only complete cure to most of the so called incurable diseases. Patanjali as a brand Talks about “Being healthy is my birth right”. It helps in improving life at low cost. Patanjali aims at providing excellent quality and safe medicines at a very cheap price compared to other foreign brands. They want people to make our country economically stronger by making them purchase medicines made in India by Patanjali and not medicines made abroad. It is a wellestablished fact that advertising affects consumers. The literature on advertising has traditionally emphasized the persuasive nature of advertising: its purpose is to alter consumers' tastes for established brand names or company reputations. Hence, a more-advertised good is preferred over a less-advertised good. Whatever be the case, Baba Ramdev’s popular opinions of advertising and at the same time not advertising is unique in its nature. Baba Ramdev's live yoga classes have become a passion to not only citizens of India but all around the globe. This is the positioning strategy used by Patanjali.

Baba Ramdev's Patanjali Medicines are claimed to be completely natural, which are made by potent herbs that are available in the Himalayas, with no or very little side effects. They have proven extremely effective in fighting all forms of sickness and diseases. Besides medicines, Swamiji recommends patients to also do pranayam, which will strengthen the immune system and quicken the healing process. Baba Ramdev has declared on Indian and International TV Channels that pranayam and yoga are the complete and natural cure for all kinds of ailments. Incase medicines

are still required then, they are available at the Patanjali Ayurved and these packages of medicines are cheaply available. The medicines can cure most of the diseases from a simple cold to cancer.

Therefore, within a very short span of time, Patanjali is a huge success and is well known not only at national but also at international level. They have a presence now in international market. Patanjali Yogpeeth is not only selling its ayurvedic medicines, but also diversifying itself through selling of FMCG products. Moreover, the organization is engaged in various good activities which are of great benefit to the society. It is trying to imbibe good character in masses with good health through yoga and ayurveda. Hence, it can be said that Patanjali Yogpeeth has succeeded in creating a positive image through ancient Indian roots and using it to sell the products in the market. With UN declaring official World Yoga Day the Patanjali products can only expect to grow in India and Internationally .

Issues Marketing Needs to Resolve 

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USER COMPLAINTS: There are numerous complaint unattended on the complaints forums, which are bringing negative recognition to the brand and thus can result in loose of trust and bad public relations. Marketers need to take up those forums, reply to the people's concerns and provide a solution to maintain a healthy relationship with them. MISLEADING AND MISBRANDING: Recently few irregularities have been found in noodles packaging where some firms declared the Patanjali Noodles are unsafe to use. INTENSIVE MARKET RESEARCH: Apart from the common health issues which are addressed by PAL products for middle age people, it is very important to get a clear idea about customer's expectations from a product they are willing to consume. Intensive market research is the key to improve the existing products or to introduce new products into the market. BIG PLANS BUT FEW RESOURCES: Big plan is to make Patanjali a global Indian Brand also aiming to acquire big market share of FMCG in India. But with

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limited resources and lack of guidance PAL is already struggling hard to maintain existing online store, unsatisfied whole sale retailers and many legal cases pointing the branding and patent issues. A good marketing strategy to convince and compel everyone involved from distributors to consumers with a good skill set and right use of technology is the need of the hour. USING SOCIAL MEDIA TO GENERATE CUSTOMERS AND REVENUE: In this era where major players like Himalaya, Johnson & Johnson, and HUL etc. are ruling over the social media and continuously connecting with consumers via various forums or promotional campaigns, it is hazardous for PAL for underestimating the power of social media. Relying on mere Yoga Programmes for nationwide recognition is quiet impractical. PAL should come up with similar promotional campaigns and increase the number of customers. They should invest more in digital marketing.

Growth Path Yoga and Ayurveda together as a combination is the trend seen in the health conscious population of the world. Patanjali brings these two together as a daily way of life into the world population. It is trying to set Yoga as a trend not only in India, but around the world. It is also setting a new trend of marketing with digital marketing. The opportunities that Patanjali sees in the marketing environment, is the presence of a health conscious world, where people are fed up with medicines that cause side effects, worse than the actual disease that they are supposed to cure. Ayurveda and Yoga do not have any side effects. Capitalising on this opportunity, Patanjali can expand its operations around the world where Yoga is followed; and in place where herbal medicines are becoming the trend. Its best approach to market the existing products would be “Integrative Growth Strategy” and “Market Development”. Such kind of strategy stresses the importance of a consistent, seamless, multi-dimensional brand experience for the consumer. Apart from yoga programmes in which Baba Ramdev promotes the Patanjali products, other branding efforts like TV advertisements, print ads, radio etc. will help in reinforcement of the brand's ultimate message. Moreover, while continuing with the intensive marketing strategy, Patanjali should target particular segments where chances of recognition are high. After successful awareness of ayurveda and Patanjali among people, PAL should sub-divide the current segment-Middle Aged people (Generally in age group 30-65) into further classes as well as introduce more segments and products related to these segments. Some of the segments, which can easily grasp attention, are: 

Infant & Kids Care: A whole range of baby cosmetics, baby health drinks, kids medicines can be an eye catcher and with this range Patanjali can grab a good market share from its big players like Johnson & Johnson, Himalaya etc.

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Middle age women: Falling health and their increasing incurable diseases is an attractive segment where investing time and money can reap good results. Healthy & Ready-to-eat snacks: After the fall of Nestle's Maggi, market is open for new entrants. In such a scenario, healthy &ready-to-eat snacks would be a big success in the cities where there is lack of time and for students. Pregnant women or post-natal care: Entire range of products, which can aid the women in healthy delivery and post-natal care, is also an attractive sector. Teenagers: Various Health Supplements required at the crucial growing age which can easily replace markets of Protein Shakes or other supplements preferred for good body building, Ayurvedic tonics for teenagers to cure acne and puberty related problems will also attract numerous customers who are looking for herbal options.

Patanjali has made its mark in the Indian market of ayurveda medicines but the brand is familiar only in the Northern parts of the country. Patanjali stores are hardly visible in other parts of the country. Moreover, people are unaware of such a brand. Store visibility and placing their products in normal retail and pharmaceutical shops will increase the awareness as well as accessibility to the consumers.

References      

Patanjali Yogpeeth - Divya Yog Mandir (Trust), available: http://www.divyayoga.com http://www.slideshare.net/RaghuvendraSinghPari/presentation-forlaunchingpatanjali-yogpeeth-2 http://www.scribd.com/doc/61780413/Study-on-Patanjali-Yogpeeth-WithOtherPharmaceutical-Companies#scribd http://www.slideshare.net/kumardevk/marketing-stretegies-by-babaramdev? next_slideshow=1 http://timesofindia.indiatimes.com/business/india-business/Ramdev-expandsempirebeyond-yoga-to-FMCG-business-poised-to-touch-Rs-2000crthisfiscal/articleshow/45861809.cms http://www.thehindubusinessline.com/companies/ramdevs-patanjali-plansasplash/article5414874.ece