Project Report

PATANJALI: The Natural Nourisher

as Course requirement
for

Sales and Distribution Management

Santosh Kumar Dubey (Roll No. 15PGWE08)

Sanjay Kumar Choudhary (Roll No. 15PGWE07)

Indian Institute of Management

Raipur

PATANJALI: The Natural Nourisher

During the minuscule hours of the early morning, the Ramlila maidan at the Ajmeri Gate,
New Delhi gets converted similar to the look of a swarming railway station at peak hour.
With yoga mats wrapped in the arm, men and women, middle-aged and old, head their way
in, expecting to get as close to the stage as they can. This entire effort is for witnessing the
yoga guru turned marketing wizard Baba Ramdev in action. His Patanjali Ayurved Limited
products are reaching every doorstep, some by word of mouth (WOM), some through
advertising but mostly by virtue of his mass following. Here's a man who has crafted his
brand equity single-handedly, putting up a Rs 2,000 crore empire of FMCG goods, shaking
up the entire FMCG fraternity and leaving the MNC and indigenous FMCG biggies clueless.
Baba Ramdev has been tactfully successful in creating brand ambassador for Patanjali
products through his yoga sessions at his camps. This process has a geometric progression
effect and helps get many more followers spreading through word of mouth yielding much
more than the returns from popular advertisement promos on various channels of television.

ABOUT PATANJALI
Today, Patanjali is the most talked about brand and has become one of the leading FMCG
manufacturers. Its manufacturing is located in PATANJALI food & herbal park, Haridwar,
Uttrakhand (India).
PATNAJALI AYURVED LIMITED, a company
registered under the companys Act 1956 having its
registered office at D-26, Pushpanjali, Bijwasan
Enclave, New Delhi 110061. Founded in 2006 and
founders are Acharya Balkrishna and Baba Ramdev.
MD of the company is Acharya Balkrishna.
Revenue of the company is around 5000 crore (201516) and number of employees are 200,000
Products of the company: Food beverages, cleaning
agents, and personal health care products. The
company manufactures 444 products including 45
types of cosmetic products and 30 types of food
products. PATANJALI products are divided into 4
product categories:
1.
2.
3.
4.

Home Care
Natural Cosmetics
Natural Food
Natural Beverages

PATNAJALI AYURVED LIMITED has tie up with Pittie group and Kishore Biyanis future group
and as per the tie up with Future group, all the consumer products of PATANJALI are now available
for the direct sale in Future group outlets. PATANJALI Ayurved Limiteds products are also available
in modern trade stores including Reliance retail, hyper city and Star Bazar apart from online channels.
Patanjali Ayurved Ltds Vision:

Self independence of India through Swadeshi

To promote Indian product
Make largest retail chain in all over India both rural and urban India
To provide reasonable price for farmers
To fulfill the demand of customers across pan-India on reasonable price
To support Indian industries by creating demands of Swadeshi products
To generate employment for youths, skilled/unskilled and professional
To establish Ayurveda and create worlds largest market chain for herbal products
To strengthen Indian economy by replacing foreign products with Swadeshi products

BUILDING A BRAND
Wrapped in a saffron dhoti and graced with a witty tongue, Baba Ramdev pecked his first
controversy when he compared carbonated soft drinks to toilet cleaners at one of his yoga
sessions. This event probably can be considered to be his first war cry against the MNCs,
which eventually took silhouette in the form of his 'swadeshi' brand Patanjali. Additionally
the positioning strategy of being natural proved Patanjali different from me too category
and is the single most point of difference (PoD) yielding high returns to Patanjali Ayurved
Limited. Openly rejecting the West has helped PAL earn many followers taking it to dizzy
levels of popularity. Patanjali has the advantage of being connected with a personality, Baba
Ramdev, a yoga guru with a following of millions who popularizes this brand through his
camps. Below given Figure-1 provides information on revenue and profit for Patanjali.

Figure 1: Growth metrics of Patanjali Ayurved Ltd.

There has been a mammoth increase of 250% in the total revenue earned by Patanjali in FY
2015-16 as compared to previous financial year. The net profit of Patanjali has witnessed a
growth of more than 200% from `156 Crores in FY 2015-15 to `317 Crores in FY 2015-16.
The numbers speak for themselves. However, a retaliation from existing FMCGs cannot be
over-ruled as they seem to have unmatched marketing capabilities; still Patanjali has been
brilliant enough in execution of its marketing strategy and have touched consumers so
profoundly that it has yielded to create a gigantic tsunami of emotional upsurge across the
entire country.
Baba Ramdev created a latent psychological need for his products through his Yoga and Pranayam
program named Bharat Swabhiman. Figure-2 below displays the journey of Patanjali starting from
creating the need in Indian consumers to a successful FMCG brand.

Figure 2: Growth Journey of Patanjali Ayurved Ltd.

PATANJALIs GOING TO MARKET STRATEGY

Yoga and Pranayam: A Compendium for Various Diseases
Baba Ramdev recommends the practice of yoga and pranayama in order to strengthen the immunity of
the human body. Citing reference of Saint Patanjali, Baba Ramdev claims that yoga and pranayama
has the abilities to cure and heal all types of physical and psychological ailments. In addition to this,
in case of any medicinal supports, PAL has developed Divya ayurvedic medicines made from potent
Himalayan herbs at a very low cost. These Divya medicines can cure variety of the diseases ranging
from a simple cold to cancer. With a long term vision of positioning close to nature, Baba Ramdev
started to promote Ayurveda and in this endeavour Patanjali Trust has tied up with 600 qualified
ayurvedic practitioners to offer treatment to masses for a variety of diseases, some of them labelled
incurable by the modern medical system.
FMCG Products
Amidst FMCG biggies like HUL, Colgate-Palmolive, Nestle, ITC, etc., Patanjali decided to enter
FMCG market with Being Natural as PoD. Patanjali had laid the foundation of its success in FMCG

market much earlier by establishing an image of an organization which cares for healthiness through
natural products and being swadeshi.
There are many competitors in Indian market like HUL, Colgate-Palmolive, Nestle, ITC, etc. across
all the categories and in spite of the fact that all these FMCG companies have by and large similar
products available at nearly similar prices, Patanjali has successfully proved its products different
through their marketing strategies.
While using Patanjali products, Indian consumers have an instilled feeling of Nationalism in their
minds. They shun the products made by international companies and use the Patanjali products to help
the countrys economy grow. Patanjali consumers also experience emotional satisfaction and a feel of
pride on purchasing Patanjalis product (i.e. we are using our own product/we are using natural
product/we are contributing for our country/culture by not purchasing MNCs products.
Unlike existing FMCGs, Patanjali, it has its own branded outlets around the country. It has recently
signed up with the Future Group's network to achieve its sales targets. Its production units are
comparatively modest. The savings in distribution margins and the low overhead expenses
straightaway translates into a 20-25 per cent of cost advantage, providing Patanjali the leverage to
price
its
products
cheaper
than
its
rivals.
But, for its emergent base of consumers, it isn't just about a cheaper price. Patanjalis consumers
genuinely trust in the goodness of ayurveda and products being natural.
Patanjali expends only a diminutive fraction of its revenues on channels of mass media advertising.
As an alternative, Patanjali it lets its loyal consumers develop their confidence and trust from the
validations that Baba Ramdev delicately delivers amidst of his yoga asanas on Sanskar channel during
the day.
The below mentioned Figure-3 displays Ansoffs Matrix to provide better understanding of overall
product and market strategy of the Patanjali Group.
Although Ansoffs matrix is more than five decades old marketing tool, it still is very effective tool to
understand the diversification strategy of any organization (Richardson and Evans, 2007). It can be
vividly understood with this matrix that Patanjali is diversifying itself from ayurvedic medicine to
FMCG products.

Figure 3: Ansoffs Matrix for Patanjali Ayurved Ltd.

PATANJALIs PRICING STRATEGY

The most critical and difficult part of the marketing
process is devising an effective pricing strategy. The
pricing strategy for FMCG products is usually a mix
of penetration and skimming. As far as products like
pranayam and yoga are concerned, Baba Ramdev's
uses a penetration strategy and cost is very less. The
diseases for which Indian populace used to spend
much more in hospitals; pranayam and yoga treat all
the ailments utterly without the use of pricey
medicines and the cost of the surgery.
Randomly few FMCG products were picked up and
checked for their comparative pricing with respect to
Patanjalis rivals. It was observed that the pricing
strategy of Patanjali is truly attractive and is proving
the star of the show in a price sensitive market of
India. It was also discovered that almost all Patanjali
products are priced around 15-30% cheaper as
compared to its popular rival brands. This adjacent
Figure 4 shows the bigger picture pithily.

Figure 4: Pricing strategy of Patanjali Ayurved Ltd.

PATANJALIs BLUE MOTION STRATEGY

Patanjali Ayurved Ltd. adopted Blue Ocean strategy to combat its FMCG rival manufacturers. In
contrast to its rival biggies, Patanjali adopted blue ocean strategy to break the value-cost trade-off and
creating factors the FMCG industry has never offered. This is what we call value innovation.
Below mentioned figure 5 provides detail of Patanjalis blue ocean strategy compared to its rival
FMCG biggies.

Figure 5: Patanjalis blue ocean strategy

PATANJALIs MARKETING MIX

Patanjalis marketing mix is as below:

Products:
Food beverages, cleaning agents,
personal health care products
Herbal OTC products to treat Cough
& Cold

Price:
Value based pricing
Alignment with cost, customer &
competitors

Place:
Franchisee Stores
Super/Hyper markets
Online Marketplace
Promotion:
Yoga Camps to create awareness
Astha Channel

Figure 6: MARKETING MIX OF PATANJALI

PATANJALIs SWOT ANALYSIS

The SWOT Analysis of the Patanjali Ayurved Limited is detailed as below:
Strengths:
Natural products free from all kind of side effects
Innovative use of spirituality
Presence of well-developed distribution networks in urban areas
Image of trust
Having a Social Responsibility of making people healthy
Weaknesses:
Tough competitors
Availability of substitutes
Poor exports levels
High price of few products
Absence of established distribution networks in rural India
Comparatively less promotional activities
Opportunities:
Large domestic market for FMCG products
Untapped rural market
Changing lifestyles and rising disposable income
Good potential for export due to attractive tax and duty benefits for setting exports units
Threats:
Political interference
Controversy generated by rival groups about Patanjali products
Removal of import restrictions resulting in replacement of domestic brands
Momentary Slowdown in Economy can have an influence on FMCG Industry

SALES AND DISTRIBUTION MODEL OF PATANJALI

Sales and distribution model of Patanjali

Ayurveds is as below:
Patanjali Ayurved provides sale of its
FMCG products through its website
with online payment facility. These
products can also be procured through
post by sending the required amount
through demand draft.
Patanjali has established Patanjali
Chikitsalayas and Patanjali Arogya
Kendra across all the cities of India
to facilitate procurement of Patanjali
products.
A Patanjali trained Ayurvedic doctor
also remains available in every
Patanjali Chikitsalaya for providing
consultation to the consumer for
usage of various ayurvedic medicines.
Patanjali herbal products are also
available at ubiquitous network of
Post offices across the country.
Every Yoga camp is equipped with a
retail outlet having all the products
available.
Patanjali has also developed disease
specific CDs which are sold through
various outlets of Patanjali.

Figure 7: PATANJALI Ayurveds Distribution Network

Reporting Structure of sales force management: In the sales function, there is a VP at the top (Vice
President, Sales and Marketing) based at Haridwar and takes care of the all the territories across India.
Below VP there are RM (Regional Manager) looking after two-three states depending on the size of
states for example one RM looks after Chhattisgarh and Maharashtra. At the state level there is ZM
(Zonal manager) and below ZM there are ASM (Area Sales Manager). Below ASM, there are TSI
(Territory Sales In-charge). All these are on company payroll. Even TSI is also on company payroll.
Figure 8 displays the reporting structure of sales force management of Patanjali Ayurved Ltd.
Generally one RM looks after 2 states, e.g. there is one RM for C.G. and Maharashtra. Zonal Manager
is State Head and below ZM, there are 4 ASM in C.G. There are 42 TSI in C.G. There are 4 Superdistributors (SD) in C.G. One ASM generally looks after one Super distributor (SD). One TSI usually
looks after one distributor. There are 70 distributors and 25000 retailers in C.G. state and Raipur has 4

distributors. Figures 8 & 9 displays Reporting Structure of sales force management and Distribution
channels of Patanjali Ayurved respectively.

VP

ZM1

RM1

RM2

ZM2

ZMn

RMn

ASM1 ASM2 ASMn

TSI1
TSI2
TSIn
Figure 8: Reporting Structure of sales force management

Company
Super
Distributor
Aarogya
Kendra

Distributors

Chikitsalaya

Retailer
Figure 9: Distribution channels of Patanjali Ayurved

PATANJALIs EXISTING PRODUCTS & DISTRIBUTION CHANNELS

Figure 8: PATANJALI Ayurveds Distribution Network

Distributors Resource Indicator: One distributor generally employs 4 salesmen for distribution of
products to retailers. One salesman looks after 200 retail outlets approximately. Distributors are
selected from the existing FMCG distributors who have good market knowledge and good credit
history. One distributor normally keeps following resources:

1Godown (Minimum 2000 sqft)

1 Godown staff

4 Salesmen

1 Computer Operator

1 driver/supplier

loader/unloader

Minimum size of godown at distributor place is 1500 Sqft with 200 sqft of additional space for
loading and unloading and 200 sqft additional space for office. So a distributor should have minimum
2000 sqft space.
Each distributors turnover is approximately ` 25 Lakh/vertical/month.
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