Patanjali

MARKETING MANAGEMENT

PATANJALI AYURVED LTD

INDEX

Page | 1

Sl no. 1 2 3 4 5 6 7 8

Title INTRODUCTION. ENVIRONMENTAL ANALYSIS USING PESTLE. SWOT Analysis. PORTER’S 5 FORCES. STP STRATEGY. ISSUES MARKETING NEEDS TO RESOLVE. GROWTH PATH. REFERENCES.

Page no. 3 4 7 9 12 14 15 17

INTRODUCTION Marketing through ancient Indian roots has become a very important topic for discussion as it affects the consumer behaviour. Hence, the many organizations are launching and then selling their own products to the customers in order to capture the market. Baba Ramdev is the one of the famous gurus in teaching pranayam & yoga in India. Baba through Patanjali Yogpeeth, has launched many products not only based on ayurvedic medicines but also on FMCG goods as well. Patanjali Yogpeeth located in Haridwar, Uttarakhand is one of the biggest Yoga institutes in India and is named after the ancient Yog Guru Patanjali. The institute is the first flagship project of Swami Ramdevji Maharaj and Acharya Balkrishnaji Maharaj and has been set up not only for treatment, research and development in Yoga and Ayurveda, but also for the production and manufacturing of ayurvedic medicines. The plant is located on the Haridwar-Delhi highway at Kankhal, Haridwar. Patanjali Yogpeeth is an institution where scientific research and treatment are offered to everybody. The ambiance is not less than Page | 2

world class. It has been constructed in almost 100 acres and designed to have buildings, car parks, and a landscape to rival the best of Delhi's housing projects. Patanjali Yogpeeth Trust, a non-profit organisation started by Baba Ramdev, aims to carry out social activities in all the spheres such as health care, education and activities. Patanjali drives its Social responsibility initiatives through Patanjali Yogpeeth Trust. Patanjali Yogpeeth is bringing health revolution in the country with the integrated approach of Yoga and Ayurveda. In addition to this, the boundaries of the organization have crossed the national boundaries and entered USA, UK, Canada, UAE and Nepal, etc. All these Trusts are working day & night to propagate and implement the historical, noble and sublime aspects of Indian culture through the philosophy and teachings of Vedas, Upanishads, etc. along with Yoga and Ayurveda. Patanjali Ayurved's Ayurvedic Manufacturing Division has over 300 medicines for treating a range of ailments and body conditions, from common cold to chronic paralysis. Patanjali Ayurveda has a plan to build many units not only in India but also abroad, in this context work has already been started in Nepal. Patanjali Ayurveda has annual turnover of around Rs. 2000 crore. Patanjali Ayurveda manufactures 45 kinds of cosmetic products. For fiscal year 2014, Patanjali Ayurved Ltd, clocked a turnover of about Rs 1,200 crore, up from about Rs 850 crore a year earlier and Rs 450 crore in fiscal 2012, as per the company filings and industry sources. During the current fiscal, Patanjali is expected to clock a turnover of over Rs 2,000 crore, according to Aditya Pittie, CEO, Pittie Group. This marks a phenomenal 67% jump from the previous fiscal year. Thus, Patanjali Ayurved Ltd is not only a company which is running for profit. It is a CONCEPT – which links the rising destiny of millions of rural masses on the one hand and many more suffering the onslaught of the unhealthy urban life style on the other hand. It is all about economically processing the farm produce into daily used products ranging from Ayurvedic health supplements to food and cosmetics and finally supplying them mostly to the urban world.

ENVIRONMENTAL ANALYSIS USING PESTLE 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 famous PESTLE analysis.

Page | 3

POLITICAL- Tax policylabor lawenvironmental lawtrade restrictionstariffs ECONOMICAL-Economic growthinterest ratesexchange ratesinflation rate SOCIAL-Cultural aspects, health consciousness,Population growth, age distribution TECHNOLOGICAL-R & D, automation, technological change. ENVIRONMENTAL- Surroundings, environment law, conditions etc. LEGAL- Regulatories, law, licences, patent etc.

POLITICAL:a) Tax Policy: - Presently there are no concessions on the Ayurveda products, but there are few discussions in the government to levy a tax concession for the ayurvedic products. Ex-chief minister of Kerala Oomen chandy raised this issue but was hardly heard. Already PAL have successfully maintained the price on the cheaper side ranging from Rs25-Rs200 for the products which costs much higher in homeopathy or allopathy. Tax concession will help PAL to decrease the price and divert the funding to further research and development of same. b) Laws: - Practice of Ayurveda does raise issues of unlicensed practice. Some Ayurvedic products raise legal red flags. The sale of herbs could be viewed as “prescribing medicine” or even possible intrusion into unlicensed practice of acupuncture. Recently PAL was in news for violating labour laws. Also, political parties have accused company of adulteration time to time. PAL have to be careful as it could affect their image and brand building in the Indian market.

ECONOMICAL:a) Inflation Rate: - The consumer expenditure on healthcare in rural India has increased from 6.6% in 2004-05 to 6.9 per cent in 2011-2012, while the urban Indians’ expenditure on medical care has increased from 5.2% in 2004-05 to 5.5% in the year Page | 4

2011-2012. NSSO report reveals that the expenditure on healthcare is highest in rural India and fifth highest in urban India during 2011-2012. And 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. b) Economic Factors:- Since the raw materials for the manufacturing are basically from the natural environment and the company focuses only in retailing in India alone the factors like exchange rates, Interest rates are either out of question or too minimal to be considered. SOCIAL:a) Consumer Trend: - Speaking of consumer trend, the people of India are becoming more health conscious. Rise in healthy FMCG products from 2284.4 US $ mn in 2003 to 3897.3 US $ mn in 2007 acknowledges the above statement. This particular trend opens up the market for PAL which offers trusted Ayurvedic products. The affordable price also helps them to cover the whole market size. b) Life Expectancy:- 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 has been attributed to better diet and health consciousness among people. This particular trends enhance the scope of companies like PAL. TECHNOLOGICAL:a) Applications of New Inventions and RND; - Inventing a new product is the best part for a growing company. Doctors and scientists are constantly working on new inventions and the better version for the old products so that benefit can be maximized for the general people. AS a part of RND, Patanjali is constantly working on the medicines of Cancer and AIDS. For the manufacturing unit in the company, it has high frequency drier unit, for quick liquefaction a fluid wed processor, tablet compressing device with the capacity for preparing one lac tablet per hour, high speed auto coater for coating the tablets and many more. b) Automation: - Company has PLC controlled packing machine having capacity of 300-400 volts with automatic blister packing equipment, have been installed. A utility centre has been set up in the production unit has two generators with boilers and compressors.

Page | 5

c) Technology Incentives And Rate Of Technological Change: - 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. Moreover, company is also working for new farming ways. LEGAL FACTORS:Ayurveda has its own medicines. There are lots of act related to Ayurveda: The medicine central council act-1970, the drugs and cosmetics act 1940 and rules made thereunder, the drugs and magic remedies act 1954 and the rules made thereunder. The drugs and magic remedies act 1954 and the rules made thereunder for the same. Except this there are several rules and laws for Ayurvedic medicines and the processed by which medicines are being formed. Quality assurance need to be fulfilled by those medicines which are being prepared and laws are there for this process as well.

ENVIRONMENTAL:The main problem which Ayurveda has to confront is seasonable herbs and their locations. There are lots of 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.

SWOT Analysis

Page | 6

• Strong global competitions • Low export levels. • Less promotion.

STRENGTH

• Untapped rural markets. • Rising income and purchasing power of people • Export potential.

WEAKNESS

• Low operational cost • Large distribution network

• Replication of product. THREAT • Infamous political attacks.

OPPURTUN ITY

STRENGHTS:a) 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 NO

COMPANY

1 2 3 4

Patanjali Ayurved Ltd (PAL) Sun Pharmaceuticals Cipla Ltd Dabur Ltd

OPERATING (Rupees) 72,06,071 7,14,70,400 6,16,14,800 5,22, 83,000

COST

b) Large 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 a consultant available which further enhances the value proposition of the outlets. Also, in the last few years, the company has changed its sales pattern and its products are also 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 Page | 7

in

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 reflected in increasing sales through ensuring wider availability of the products.

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

PORTER’S 5 FORCES Page | 8

Threat Posed by Substitutes –

1) Allopathic industry is run in a highly organized way Firms making allopathic medicines use multiple strategies to sell their products. They give bonuses and incentives to doctors to prescribe their medicines instead of going for other treatments like Ayurveda etc. People have a natural inclination to listen to highly qualified medical practitioners who prescribe these medicines. 2) Threat from homeopathic medicines There is a lack of awareness and guidance among common people about the effectiveness of Ayurveda. There are certain sections who completely rely on homeopathy medicines for treatment of ailments and they always tend to continue with those medications. 3) Addictions caused by allopathic medicines can make consumers show preference for thatWhen it comes to medicines, many buyers already have certain medical treatments that they follow. And many of the allopathic medicines have addictive content which are present in laxatives etc. The presence of these will cause an involuntary dependence in those medicines and make the users addictive to it.

Bargaining Power of Buyers – 1) Reliable offerings from local Pharmaceutical industry – There is big difficulty in making consumers switch their allegiance from local players to a national brand. Page | 9

Local buyers mostly prefer medicines from locally accessible small pharmacies and some other family owned enterprises with their own secret ingredients which has a reputation for being good and reliable. 2) Time factor associated with Ayurvedic treatment Natural and Ayurvedic treatment are usually long drawn out process which requires continuous usage for a long period of time. Those who don't get the benefits from short term usage, switch to allopathic treatments because of the busy nature of present day life. Also, Patanjali medical products usually need a mix of medicine as well as yoga to get the best results. This can prove to be cumbersome for many people. 3) Preference for alternate medicines when it comes to specific diseases There are specific diseases for which Ayurveda is not found to be as efficient as some other proven options available. Alternate medicine has become popular with sufferers of specific diseases like Candidiasis etc. Sufferers of such diseases will always prefer medicines prescribed by doctors.

Bargaining Power of Suppliers – 1) Some of the big players acquire supplies giving twice the amount. Some companies who are in the same segment, acquire the medicinal herb supply giving twice the rate which Patanjali provides. This often leads to herb supply issues as suppliers tend to favour those firms which offer better returns for their product supply. 2) Political conflicts and lack of government support Due to many of Baba Ramdev's socialist and anti-political activities certain sect of suppliers are facing pressure at a political level not to provide regular supplies to Patanjali. As a result they had to setup their own herbal gardens which has over 200 medicinal herbs and plants now. But there are certain highly useful medicinal herbs which can be grown only in certain climate for which the company is still having to rely on external suppliers. 3) Rare herbs gives suppliers immense bargaining power – There are certain herbs which could be grown only in specific climate zones having certain types of soil. As all of Patanjali products are based on extracts from different herbs, for these kind of herbs Patanjali has to solely rely on these niche suppliers. This directly hands immense bargaining power to the suppliers as they can inflate the prices way beyond the actual market rates.

Threat of New Entrants – 1) Sub-par products from new entrants – Some of the new entrants into the herbal product segment offer sub-standard product made out of substitute plants rather than actual herbs for specific use. This can lead to overall degradation of the reputation of herbal and ayurvedic products. 2) Emergence of new local and national players – Page | 10

Due to ever increasing popularity of Ayurvedic and natural products both nationally and globally, many new firms are entering this segment. They advertise heavily through multiple channels and are slowly eating into Patanjali’s market share. Apart from this many new small local Ayurvedic treatment options are on the rise. Many of the foreigners come over and visit these centres just to get hands on specialized treatment from there and naturally they’ll favour using the products offered by those localized centres. Competitors – 1) Even though Patanjali’s growth has been rapid, Dabur, Baidyanath and Zandu makes up about 80% of the Indian Ayurvedic market. 2) Threat from established herbal brands like Himalayas, Emami and Jovees who already have a good pan India presence and are marketing heavily unlike Patanjali. 3) Famous Ayurvedic centers like Kottakkal Arya Vaidya Sala which are well known even at a global level. They have their own set of products which they prescribe as part of the treatment which are having patented formulas. CHALLENGES Apart from this, Patanjali, like any other firm, is having to deal with a growing list of complaints from consumers in online forums regarding quality of the product. Couple of sample screenshots are attached below.

Unless these issues are dealt with very fast, bad reputation could build up. So consumer grievances and complaints should be addressed in a prompt way and get it settled offline without giving scope for much negative publicity. There have also been lots of customer complaints about irregular supplies and lack of stock for certain products. By implementing a better supply chain the company has to make sure that they won’t lose their existing customer base, who are loyal to the product to one of its rivals.

Page | 11

STP STRATEGY SEGMENTATION and TARGETING: 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 - a) desired service and b) adequate service. Desired service is the service that a customer desires and expects to get. Whereas an 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. Patanjali Yogpeeth, a multi-million rupee venture, Ramdev's dream project, set as a rival to World Health Organization only on the basis of sound service that it boasts of providing. The Patanjali Trust in Haridwar, Uttaranchal is equipped with all the latest and most sophisticated gadgets.

Patanjali targets both “Everyone who wants to live healthy” and “Anyone suffering from any disease”. This is because it follows mass customization as explained above. 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 Page | 12

hospitals, on the other side pranayam and yoga treat all the ailments completely with cheap and quality medicines, operations or surgery. 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.

POSITIONING: 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 well-established 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.

Page | 13

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.

ISSUES MARKETING NEEDS TO RESOLVE  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 labels of six products and such violations have been termed as "misleading" and "misbranding". Salt, mustard oil, honey, black pepper, pineapple jam and Arogya Besan were the six sample food products which were under the controversy. "It states that the product is manufactured elsewhere while claims of purity have been made by brand Patanjali, which becomes misleading," said the district magistrate. Although such a complaint was denied by Ramdev but this has left customers confused. Marketers need to convey the authenticity of the products to eliminate such doubts from the mind of the consumers.  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.

Page | 14

Intensive market research is the key to improve the existing products or to introduce new products into the market.  YOU HAVE 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 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 age 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.

Growth Path Yoga and Ayurveda can be considered a combination that 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 really 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)

Page | 15

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. 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.

REFERRENCES Page | 16

 Patanjali Yogpeeth - Divya Yog Mandir (Trust), available: http://www.divyayoga.com

 http://www.slideshare.net/RaghuvendraSinghPari/presentation-for-launchingpatanjali-yogpeeth-2  http://www.scribd.com/doc/61780413/Study-on-Patanjali-Yogpeeth-With-OtherPharmaceutical-Companies#scribd  http://www.slideshare.net/kumardevk/marketing-stretegies-by-baba-ramdev? next_slideshow=1  http://timesofindia.indiatimes.com/business/india-business/Ramdev-expands-empirebeyond-yoga-to-FMCG-business-poised-to-touch-Rs-2000cr-thisfiscal/articleshow/45861809.cms  http://www.thehindubusinessline.com/companies/ramdevs-patanjali-plans-asplash/article5414874.ece

Page | 17