11/16/2016

DecodingPatanjalispopularity|VCCircle

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Saturday,February20,201604:42IST

DecodingPatanjalispopularity
Patanjali'smarketsharewilldependonhowlongitcankeepitspriceslow.
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BYANUSHREEBHATTACHARYYA

ShahJunaid/VCCircle

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Apremiumproductbutaneconomicalpricetag.ThatiswhatyogaguruBabaRamdev
backedbrandPatanjaliAyurvedpromisescustomers.Thatstrategyhasworked,with
PatanjaliAyurvedLtd,whichflauntsitsMakeinIndiaroots,settotouchtheRs5000
turnovermarkinFY16.
KeepingpriceslowhasbeenthecornerstoneofPatanjali'smarketingstrategy.Forinstance,

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a250gmbottleofhoneyfromPatanjaliAyurvedLtdcomesforRs70.Incontrast,market
leaderDaburIndiasellsthesamepacksizeatRs120.Similarly,chyawanprash,oneofthe
firstproductsfromtheHaridwarbasedcompany,ispricedatRs250fora1000gmjar.A
900gmjarofchyawanprashfromDaburcomeswithaRs300pricetag.
Wearriveatthepricebycalculatingthecostofrawmaterial,administration,processing
costandabitofmarginforsustenance,saysAcharyaBalkrishna,managingdirector,
PatanjaliAyurved,andBabaRamdevscloseconfidant.
Whileitspricingstrategyisn'tanythingnew,ithashelpedinattractingeyeballs,especially
inapricesensitivemarketlikeIndia.Anynewcomerwhoentersthemarkettriestomakea
dentbycrashingtheprice.Patanjalihasalsofollowedthesamestrategy,explainsRajat
Wahi,partnerandhead,consumermarkets,KPMGinIndia,anauditfirm.
However,Wahisaysthebigquestionishowlongthecompanywillbeabletosustainitslow
pricingstrategy.

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DecodingPatanjalispopularity|VCCircle

Priceplatform
GoingbythelatestIIFLInstitutionalEquitiesreport,itseemsPatanajaliisalreadyrevising

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itsstrategy.Thereportstatesthattherehasbeenanincreaseinpricesofpopularproducts

ManveeSRetweeted

suchastoothpastesandshampoosoverthepastfewyears.A100gmtubeofDantKanti

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toothpaste,oneofitstopsellingproductsnowsellsforRs40againstRs28earlier.
Similarly,shampoo,acategorywhichitenteredmuchlaterhasalsowitnessedprice
revisions.Thepriceofa200mlbottleofKeshKantiNaturalshampoohasgoneupfromRs
68toRs75.ThecompanyhasalsoincreasedthepriceofitsantidandruffshampoofromRs
85toRs95(200ml).

@vccircle
#Infographic
WhichIndian#smartphonemanufacturerhas
thelargest#marketshare?
ow.ly/cpKE306dpy4

GheeisoneproductwherePatanjalihasfollowedadifferentstrategy.Marketedasa
premiumproduct,a1000gmjarofPatanjaliGheecomesforRs450comparedtoa1000
gmjarofAmulGheewhichsellsforRs390.
TheIIFLInstitutionalEquitiesstatesthatbyFY20,Patanjaliisexpectedtohavedouble
digitmarketsharein10ofthe25categoriesincludingghee(33percent),and
chyawanprash(30percent).ItprojectsarevenueofRs3,100crorefromthesaleofits
Embed

gheebyFY20.

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BalkrishnasaysthatasacompanyPatanjaliisnotcompetingagainstanyone.Eachoneof
usistryingtodoagoodjob,sothateventuallypeoplebenefitfromit,heexplains.
Yet,evenasthefirmhasincreasedthepriceforsomeofitsproducts,thelowpricepoints
havehelpedinsamplingofitsproducts,ultimatelyresultinginhighsales.InIndia,people
donotmindtestinganewproductifitdoesnotpinchtheirpockets,saysNChandramouli,
CEO,TrustResearchAdvisory(TRA),abrandintelligenceanddatainsightscompany.

Withacultfollowing,atelevisionchannel,
andyogashowsroundthecountry,
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Patanjalisbrandcampaignisalreadyat
thehalfwaymarkbeforeitevenstarts

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Tobesure,thelowpricingstrategydoesnotimpresseveryone.Lowpricepointsalways
raisequestionsaboutproductquality.Ifothercompanieshavebeenchargingacertainrate
forthesamekindofproducts,howisPatanjaliabletosellitatamuchlowerprice,asks
AnilVerma,aresidentofupscaleDefenceColonyinDelhi.
Patanjalihasalsobeenadoptingthemarketingtacticsofitscompetitors,whichcould
alienatecustomerswhotrustthebrandspromiseofpurity.Itsinstantnoodlesbrand,
launchedjustbeforeonetimemarketleaderMaggireturnedtostoreshelves,wasnamed
AttaNoodles,thusdownplayingthefactthatitwasactuallya50:50blendofattaand
maida.
LastDecember,aqualitytestwasdoneonPatanjali'sGheebytheFoodSafetyand
StandardsAuthorityofIndia(FSSAI)aftermuchdebateonsocialmediaonitsperceived
quality.

Brandbuilding
ThatiswhereBabaRamdevscharismacomesin.Withacultfollowing,atelevisionchannel,
andhisyogashowsroundthecountry,Patanjalisbrandcampaignisalreadyatthehalfway
markbeforeithasevenstarted.

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DecodingPatanjalispopularity|VCCircle
ShahJunaid/VCCircle

AhoardingshowcasingPatanjaliproductsonatruck

Thishasalsohelpedthebrandkeepatightleaseonitsadvertisingspend.
ContrarytomediareportsthatthecompanyspentawhoppingRs200300crorein
advertisinginFY15,Patanjaliclaimstohavespentonly11.5percentofitstotalturnover.
HenceinFY15,thecompanyspentRs2030croreinadvertisingandmarketing.Similarly,
thecompanyisexpectedtospendRs5060croreonadvertisinginFY16.
AsBalkrishnaunabashedlyadmits,Patajalihasboughtmediainventoryatadiscounted
rate,whichhashelpedthecompanyincontrollingtheadspend.
Thecompanywantssimpleadsjusttodisseminateinformationaboutitsbrands,says
Balkrishna.Wedon'tmakeanyfalsepromisesinourads.Theadsaremorelike
infomercials,headds.
ForDDBMudraGroupwhichhandlesthecreativedutiesforPatanjaliGhee,AttaandDant
Kanti,thecreativebriefwastoinjectthecommunicationwithabrandproposition.

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TheadsforPatanjalitalkabouttheproductanditspromisetoconsumers.Theideawasto

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makeinterestingadsbutnotboringones,saysVandanaDas,president,North,DDBMudra
Group.
Infomercialornot,brandevangelistssaythatthesimpleadsbyPatanjalihavehelpedin
winningconsumers'confidence.Whilethewholeworldiscreatingthemebasedads,hereis
onecompanywhichhasstayedawayfromalltherazzledazzle.Straighttalk,withnofluff,
hashelpedincreatingthetrustfactor,saysHarishBijoor,brandstrategyexpertandCEO,
HarishBijoorConsultsInc,aconsultingfirmwhichspecialisesinbrandandbusiness
strategy.
AccordingtoBijoor,32percentoftheadsreleasedbybrandsaretaggedbyconsumersas
false.
Evenasthecompanyisridingonitscharitabletrusttag,Bijoorsaysitcannotcontinue
doingsoforever.ItwillbeforcedtobehavelikeanyotherFMCGcompanysoon,evenin
caseofitscommunication,heexplains.
Themeteoricriseofthecompany,paralleltotheascendancyoftheBharatiyaJanataParty
(BJP)topower,hasalsoraisedmanyeyebrows.BabaRamdevisseentobeclosetotheBJP
anditsaffiliates,sharingsimilarviewsonseveralsubjects.
Balkrishna,however,dismissestalkofanysuchlinkagesandsaysallthetalkaboutPatanjali
hasactuallyhelpeditgrow.Wehaveneverhadthegovernment'sbacking.Infact,wehave

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11/16/2016

DecodingPatanjalispopularity|VCCircle

openlyprotestedagainstsomeoftheideasoftheBJPledgovernment.Asforthequalityof
ourproducts,theFSSAItestresultsonPatanjaliGheesayitall,hesays.
(ThisisthefinalarticleinthethreepartseriesonPatanjaliAyurved.Toreadthefirstparton
howthisnicheayurvedicmedicinemakerbecameoneofIndia'sfastestgrowingconsumergoods
company,clickhere.ToreadthesecondpartonhowPatanjalicreatedanetworkofstores,click
here.)
Tags:PatanjaliAyurvedLtd.,BabaRamdev,AcharyaBalkrishna

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