The Rise of Patanjali’s FMCG Business – Strategy With RS

‪#‎BabaRamdev‬’s ‪#‎Patanjali‬ is in the news. It is estimated that Patanjali’s Sales is likely to top INR 5000 crore by the end of FY’16.

How is Patanjali able to clock impressive sales growth figure at a time when other FMCG companies are finding the going difficult?

I wish to share with you my reasons which could be leading to Baba Ramdev’s Patanjali growth.

It is based on a fortuitous meeting I had with him in 2011 in Goa during which I spent the better part of my day, discussing various activities which were undertaken by him – including Patanjali.

 

 

These are my takeaways …

1. Product: Use genuine & natural ingredients and in sufficient quantities which make them effective in delivering the promise, it claims to deliver.
Result – Customers who buy the brand experience the promise.

2. Recipe: It is derived from our heritage.

3. Promise: Goodness of nature with each product having its own unique benefits which are effectively highlighted.

4. Price: 15 – 30% lower than the competition.

5. Promotion: Use Alternate Media to build brand:
a.‪#‎Buzz‬ Creation (Word of Mouth Publicity). When a company makes a claim, its believability is merely between 20 – 49%. But when real people speak good about a brand – the believability jumps to 70%; when friends speak about a brand’s goodness the believability jumps to 90%. Result: Increase in the believability of brand promise accompanied by a drop in Advertising & Sales Promotion expense.
b.‪#‎PublicRelation‬: Baba Ramdev – is the ‘celebrity’ endorser of his brand. He is always in the news. When the Press writes about him his brands get publicity & benefits from it.
c.Events: He holds innumerable Yoga camps (events). In these camps as he demonstrates the yoga poses, he subtly introduces the brands by highlighting their numerous features & the resultant benefits they offer. And request his ‘followers’ to try & experience the benefit themselves.
d.Digital Medium: His Website is extremely engaging.
e.TV: For the better part of a day he is always on ‘Sanskar’ Channel. On & off while demonstrating a Yoga pose, he subtly introduces his brands.
f.Integrating Brand & not merely product placement: He intelligently integrates his various products in Yoga camp, TV shows and eschews forceful product placement.

6. Place (Distribution): Multiple distribution channels.
a. Company-Owned stores which exclusively sell his range of products.
b. Normal FMCG distribution channel
c. Modern Retail: Big Bazaar etc…

7. People: The sales person in his stores according to him act as an ‘Authentic Consultant’. Take this case of a person who has come with a problem; the store person will patiently listen to their problems & then provide a solution to eliminate the problem from the root itself. He takes the pain to point out that big companies when they give solutions ensure that people become dependent upon their product for life, which results in business for them – as long as the person lives! His strategy is to provide solutions so that the problem gets rooted out & the person does not need his product.

8.Expenses: He knew I had worked in alcoholic beverage company, traveled by air and stayed in 5 Star Hotel when on a company work. He contrasted his system:
a. Travel: His sales people travel by public transport – bus, train, shared tempo / auto. When they visit stores in a town they seek help from friends to take them around on a bike or ride it themselves.
b. Stay: At friends / relatives place in the town they are visiting. Only if these options do not exist, then they can stay in functional hotels – not 5 Stars. If 2 or more people are travelling then they share the room.
c. Food: No alcohol & non-vegetarian food can be had on company expense – only hygienic & basic food is encouraged.
d. Salary: He knew I was from IIM. He looked at me & mentioned that he hired local people at extremely competitive salary and not at ‘IIM salary’.
e. Controlling expense ‘mindset’: Take his Personal Assistant. He was a retired person. He had an obsolete model of Nokia phone which most of us would not have deemed it fit to be seen with. I asked him why does he not have a new model. He looked as if I had asked a stupid question & explained – ‘phone is for communication not for fashion, jee!’

Has his strategy borne fruit? My mother insists on using his range of products and has successfully convinced my wife to opt for them vouching for their goodness & effectiveness.

Business Lesson for us: 1. Focus on creating a great product. 2. Make sure the product delivers the promise. 3. Always place customer interest ahead of yours. In return, they will protect your interest by giving you business. 4. Make the customer your Brand Advocate. 5. Use Alternate media to build your brand – Buzz, PR, Events & Digital. 6. Do not ever permit your expenses to soar. Keep them as low as possible.

Disclosure: I have shared with you what Baba Ramdev shared with me along with my observations during the day I spent in his company. Of course, 4 years have passed since then and many things must have changed.

 

 

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rajesh-srivastava-insideiim

 

 

In this series, Rajesh Srivastava, Business Strategist and Visiting Faculty at IIM Indore gives you a regular dose of strategy case studies to help you think and keep you one step ahead as a professional as compared to your peers. Rajesh is an alumnus of IIM Bangalore and IIT Kanpur and has over 2 decades of experience in the FMCG industry. All previous Strategy with RS posts can be found here

Comments

5 comments

ramji yahoo

Thanks for sharing, but is he under utilizing the market opportunities, I mean if he use the campaigns , staff travels by air, staff usage iphone, android – like Unilever, GSK, will they achieve 15000 crores instead of 5000 crores.

Rajesh Srivastava

Ramji I am not sure about the efficacy of your suggestion … a great company does not copy anther company’s formula …

ramji yahoo

Sir, even I am not 100% sure about the efficacy of my comment, but I am 60% sure that if the sales staff travel by car and planes (than by public buses) definitely they would bring little more results (either increase in sales or increase in their work life balance). I am 90% sure that Unilever, P&G, GSK, Henkel, L’oreal are not fools asking their staff to go by air/super fast trains than by Public buses or 150cc bikes.

Rajesh Srivastava

Ramji you are entitled to your thoughts / views. But I would request you to be a bit more prudent in your language & choice of words. It does not do justice to your thoughts. Trust you understand where I am coming from.

ram

Sir, simplicity of sales people (as like Baba Ramdev) make the customer to trust the product as genuine and natural product to meet the requirement of needy people and replacement of multi national branded products. If salespeople of patanjali travel in flight or staying at star hotel, then it will be irrelevant to the simplicity policy of Baba Ramdev and it may affect the product image in wrong way. Customer see the product of Patanjali from the home of Baba Ramdev and trust them that it will improve the health of people.

R. Muthiah