A Consumer

Behaviour Report

On

Under the able

Date: 10/10/2018

Submitted by:
J P Revanth
2018JULB01065
Contents
Introduction .................................................................................................................. 3
The Company: ........................................................................................................... 3
VISION .......................................................................................................................... 3
MISSION ....................................................................................................................... 3
Patanjali Ayurveda – Current Market Insights ........................................................ 4
Patanjali growth story .................................................................................................. 4
Focus on revenue over profitability ............................................................................ 5
Patanjali’s Supply Chain Management ...................................................................... 5
Sales and Distribution – Patanjali............................................................................... 5
Patanjali Products in the Market ................................................................................ 6
Pricing of Patanjali products vs its competitors ........................................................ 7
SWOT ............................................................................................................................ 7
Consumer Survey ......................................................................................................... 9
Conclusion ................................................................................................................... 18

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Introduction

The Company:
Patanjali Ayurveda was formed in January, 2006 as a private limited company by yoga guru
Ramdev and his partner Sri Acharya Balkrishnaji. In June, 2007, it was converted to a Public
Ltd. Company. It is registered under the Companies Act, 1956 and has its registered office in
Bijwasan, New Delhi and three other offices in Haridwar. The company was started with the
vision of uplifting the life of Indian farmers by locally sourcing the raw materials from them
and making their lives better while at the same time provide an opportunity to the Indian masses
to move towards healthy lifestyle by promoting Ayurveda and herbal products. Baba Ramdev
started off as a yoga trainer who featured in televised programs in Aastha and Sanskaar
channels and made Indians realize that they have forgotten Indian tradition and art forms- one
of them being yoga. He got wide acceptance and word of mouth publicity helped him reach to
a wider audience. He projected Yoga as a panacea to all the health problems. In its first year of
operations, 2008, Patanjali generated a revenue of over 60 crores.1 Almost 10 years later, the
home-grown venture has grown to be a 5000 crore company and is posing a threat to the well-
established companies in the FMCG domain. Patanjali Ayurveda- Entry into FMCG

Patanjali started off manufacturing bulk Ayurvedic medicines later branching its operations
into FMCG markets as well. Since, the FMCG market has low entry barriers, Patanjali soon
established itself as a major consumer goods’ manufacturer. The recent trends clearly imply
that the company’s priorities are shifting from medicines to consumer goods, perhaps because
the net revenues earned through FMCG are on par with Ayurvedic medicines.

VISION

Keeping Nationalism, Ayurved and Yog as our pillars, we are committed to create a healthier
society and country. To raise the pride and glory of the world, we are geared up to serve people
by bringing the blessings of nature into their lives. With sheer dedication, scientific approach,
astute planning and realism, we are poised to write a new success story for the world.

MISSION

Making India an ideal place for the growth and development of Ayurveda and a prototype for
the rest of the world.

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Patanjali Ayurveda – Current Market Insights

Patanjali as a brand currently has more than 350 products from Soap to Toothpaste and from
Oats to Health drinks. The 2014-2015 revenue of Patanjali Ayurveda crosses Rs. 2000 crore
figures. In January 2016, IIFL said “Patanjali Ayurveda Ltd has, in a short span of less than a
decade, recorded a turnover higher than what several companies have managed to achieve over
several decades. There is no doubt that Patanjali is a disruptive force in the FMCG space and
is a credible threat for the incumbents.” The industrial data indicates that the brand has a market
share of 4-5%.

Patanjali growth story

In terms of revenues and net profit, the company had nearly grown 10 times in a span of 5
years. Revenue and profit data from 2011-2016

Year Revenue(in crore rupees) Net profit(in crore rupees)

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Focus on revenue over profitability

As per the report by edelresearch “The company is well on course to achieve its targeted
revenue of ~INR50‐60bn in FY16 (INR20.2bn in FY15). Even though the thrust is not on
profitability, the company managed to clock 20% approx. EBITDA margin in FY15, aided by
better cost management (latest machinery and strong R&D capabilities) and lower A&P
spends”

Patanjali’s Supply Chain Management

The three phases of patanjali’s supply chain are product flow, information flow and cash flow.
Patanjali has recently completed a tie up with Future group to sell the products. They also sell
their products through their own outlets opened in almost every district/city of India. Each
outlet has to send their demand to central office at Hardiwar. Then as per the demand, various
products are gathered from various units of Patanjali. The items are delivered to outlets majorly
through Patanjali transport.

Sales and Distribution – Patanjali

 Patanjali provides sale of products online and can also be procured through post by
sending the money through demand draft
 Patanjali herbal products are available at Post Offices across the country
 Patanjali also has “Patanjali Chikatsalayas” and “Patanjali Arogya Kendra” in almost all
the cities of the country
To strengthen the distribution Patanjali is also implementing ERP which will help them in
managing the inventory.

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Patanjali Products in the Market

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Pricing of Patanjali products vs its competitors

Source: Amazon
As we see the table it is clearly evident that the price of Patanjali product is comparatively
low in all products than its competitor, but since due to popularity and availability of other
products affects the selling of Patanjali.

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SWOT

Strength
 Spiritual connect with the consumer.
 Herbal products with natural ingredients
 Strong and Innovative R&D
 Baba Ramdev – face of the brand

Weakness
 Controversies like noodles not approved by FSSAI at the time of launching
 Products like putrajeewak which creates negative impact on the brand
 Strong competitors and low exports

Opportunity
 There is a large domestic market for FMCG Products
 Low entry barrier for new and innovative herbal products

Threats
 Competitors keeping a close eye on the growth of Patanjali Ayurveda
 Controversies around the Patanjali group
 Weak supply chain as compared to the competitors

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Consumer Survey
I created an online Google form to conduct the survey, wherein I got 43 responses.

Most of them are aware of the product except few, which indicates the popularity of the
product.

From the chart it is clearly evident that most of consumer uses Patanjali products more than 6
six months but less than a year which infers that the people started using Patanjali in recent
days, reasons might be the recent popularity or the availability of products.

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The huge number of followers of Ramdev’s yoga constitute the main customer base of
Patanjali. Besides this, people in the age group of 22-30 years and above, people living in urban
cities who are health conscious are the customers of Patanjali products. These people are
worried about the chemicals in all the modern day so called healthy packaged food and other
personal care products. The lower price points of Patanjali products have promoted sampling
and once they use it and like it, they continue using the product. Customer base is also
expanding because of the positive word of mouth marketing by friends, colleagues and family
members. People from other segments have also started using the products.

Since the most of the responses is about the same which implies that the consumer preferences
is getting changed towards Patanjali, since the price of each product compared to its substitutes
is low there is a chance for the Patanjali to gain more customers, if it uses market analysis or
survey to get the feedback and to improve in that.

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There are a lot of brands and hence an equal number of offerings from each brand. The product
differentiation is not superb and thus commoditization is not uncommon. Thus threat of
substitutes is quite high since there is a huge number of products in the same category. The
only concern is the availability of products in particular channels. So the selling is medium, in
future there is a possibility to become high selling if it removes all the pain points of consumers.

Patanjali must focus on Ayurvedic and Health care products to generate more revenue. Further
it should analysis why the other Patanjali products are not preferred by customers, improve that
to increase the sales of that product too. Competitors are fearing for the price of Patanjali which
is the greatest advantage of Patanjali.

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Patanjali sources most of the raw materials from local farmers and thus can offer products at
lower prices which is the major response. All the products have some Ayurvedic touch to it.
This appeals to the masses. Besides there are no chemicals used for manufacture of the
products having Baba Ramdev as the brand ambassador leads to a transfer of credibility from
Ramdev to the brand itself. Thus it does not have to work hard to build trust among its
customers. Finally Patanjali has a very good distribution channel. It has 1200 Patanjali
Chikitsalayas, 2500 Arogya Kendras, 7000 open stores in villages and 5600 marketing
vehicles apart from tie-ups with hypermarkets like Big bazaar, Reliance retail, Hyper city,
Star Bazaar(Tata), D-mart, Spencer retail, More(ABG retail). It has also recently tied up with
Apollo pharmacy and thus had license to use its 2200 stores in India for distribution of its
products. Baba Ramdev has strong political affiliations which he can utilize to get benefits
from the government. He has already helped Patanjali secure loans at lower interest rates and
is also being offered subsidized land as food parks. These are the strengths of Baba Ramdev
but it is not sustainable if he deserts the company.

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Having Baba Ramdev as the brand ambassador leads to a transfer of credibility from Ramdev
to the brand itself. Thus it does not have to work hard to build trust among its customers.

Ramdev’s strategy plays a vital role here, he claims that Patanjali products are chemical free
and even the consumers get attracted towards that comment and they also demand the same.

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These are some more questions I used in the survey,

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Conclusion

Since the survey is conducted in a small scale, we cannot come to a conclusion on the success
or failure of Patanjali products. Hence, I generally conclude that increasing market share and
the success of Patanjali is due to the following factors:
• Effective communication strategy
• Better quality at affordable prices
• Easy availability and wide range of products
• Brand image based on the credibility of Baba Ramdev and
• Consumer awareness of Patanjali products.
Effective communication strategy emerged as the key factor that has influenced the
perception of Patanjali products and created a positive brand image for the same.
Baba Ramdev’s Patanjali has made disruptive progress in the FMCG sector. Within a span of
less than 10 years, it has displaced Ayurvedic market leaders like Dabur and Himalaya. From
the survey, Patanjali has become synonymous with ayurvedic products. While the total demand
is not being satisfied as of now, efforts are on to increase sourcing so as to maintain steady
supply of raw materials. They have increased their margins for franchise stores as well as retail
chains to around 10% and thus are getting better placement on the shelves. They are focused
on serving the masses and thus cut corners in packaging and advertising. This is changing as
they are spending on advertising recently. The radio campaign is the first proof of that. Ramdev
Baba’s charisma has pushed Patanjali to grow over 10 times in a span of less than 10 years.

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