1) Detailed company analysis of Patanjali including marketing mix, brand management, product development, distribution, supply chain, procurement,company policies. 2) Value chain analysis to determine the nature and degree of impact on the FMCG sector

1. GROUP 10
MIHIR SANGODKAR B15029
NIKHIL CHOUDHARY B15031
NIRRANSH JAIN B15032
PRAKHAR AGARWAL B15035
RUTU VELANI B15044
STRATEGIC MANAGEMENT
PATANJALI: BUSINESS MODEL
AND
EFFECT ON THE FMCG SECTOR IN INDIA

2. COMPANY HISTORY

3. 1
2
3
4
1997
PAL started as a small pharmacy in Haridwar
2006
Established as a Pvt. Ltd. company
2010
The world’s largest food park opened
TIMELINE
In 1997, Patanjali Ayurved Limited (PAL) started
as a small pharmacy in Haridwar, by P.P. Swami
Ramdev Ji Maharaj
Acharya Balkrishna established Patanjali Ayurved
Limited as a formal private company on 13th
January 2006 along with Baba Ramdev .
2012
Hit revenues of Rs. 450 cr, 450 stores

4. 5
6
PRESENT
TIMELINE
Baba Ramdev does not own any percentage of
equity in the company
On 5 January 2010, the world’s largest food park opened 20km from the holy city of Haridwar,
Uttarakhand, India. The INR 500 cr Patanjali Food and Herbal Park is spread across ~95 acres
in first phase; and has generated direct employment for 7,000 people. The construction started in
February 2009 and was completed in a record time of less than a year
2015
Hit revenues of Rs. 2,000 Cr., has 4000
stores
2015
Deals signed with Future Group and DRDO

5. CURRENT SCENARIO

6. 1
Food park is now spread over 150 acres
~85% of products are manufactured by PAL
in-house and only few products outsourced.
2
Current Product Portfolio: edible oils,
biscuits, and noodles to toothpaste, hair and
skin care products, and groceries
Expansion: cosmetic products, baby care
products, animal feed and dairy products.
3
The rise of PAL has been so staggering and
well entrenched in consumer psyche that
large Indian and Foreign Research houses are
considering this pretty much a Disruption
Factor in the overall consumer sector.
4
Aug 2015: CLSA came out with a report titled
“Wish you were listed, Patanjali Ayurved” and
summarized the threat it presented to listed
counterparts
5
Patanjali's revenue > Dabur, Emami, Marico,
and Godrej Consumer. Ghee is the biggest
money spinner for Patanjali, contributing 30-
35% to its revenue, followed by healthcare
(20%), and toothpaste Dant Kanti (8 %)
6
PAL has provided more than 2.00 Lac
indirect employment
IDEA
FACTS

7. COMPANY ANALYSIS

8. Strengths Weakness
OpportunitiesThreats
S W
T O
• Low export levels
• Strong competitors and
availability of substitute
products
• Less expenditure on
marketing and promotional
activities
• No distribution network in
rural areas
• Changing lifestyle and rising
income levels
• Change in trend of
becoming more health
conscious and using more
organic products
• Large domestic market
• Rural market to be tapped
• 100% natural products with
little side effects
• Brand image of the trust
• Considered socially
responsible for health of the
society
• Established distribution
network in urban areas
IDEA
SWOT ANALYSIS
• Political Interference
• Removal of import
restrictions
• Controversies

9. 01
PRODUCT
All Existing
Products and
herbal products
for
different diseases
.
04
PROMOTION
Yoga Shivir,
Youtube,
Social media
Free media
promotions
03
PLACE
Franchise Stores,
Super/Hyper markets
& Online marketplace
02
PRICE
Value Based Pricing
Alignment of cost,
customers &
competitors.
SEGMENTATION
Demographic basis – Age groups from 15-64
Psychographic basis – Personality, lifestyle
and class
TARGETING
75% of the world’s population uses herbal care
products
65% of India’s rural population uses Ayurveda
remedies
Trend shift towards natural herbal products
POSITIONING
Ayurvedic products are positioned as products
who can treat diseases with zero side
effects
Juices and food products are portrayed as a
healthy way of life
MARKETING MIX MODEL

10. Market
Penetration
- Yoga Shows
- Spiritual
lessons in
ashram
Product
development
- Research in
Ayurveda and
herbal medicines
Market
Development
- Targeting youth
and newly
health conscious
customers
Diversification
- Cosmetics
- FMCG
products
- Health Drinks
EXISTING
PRODUCTS
NEWMARKETS
NEW
PRODUCTS
EXISTING
MARKETS
 Products like Patanjali Shampoo and health
drinks are in growth stage of the life cycle
 New diversified products like fertilizers and
clothing are in introductory stage
ANSOFF MATRIX
PRODUCT LIFE CYCLE

11. BUSINESS STRATEGY

12. 01 PERSONAL BRANDING
02 YOGA SHOWS
03 ONLINE & OFFLINE SHOPPING EXPERIENCE
04 ADVERTISEMENTS
05 SOCIAL MEDIA
MARKETING AND
BRAND BUILDING
 Cult personality and charisma of Baba
Ramdev
 535 branches of Patanjali Yog Ashram
 Pan India Yoga Shows
 Broadcasted in 170 countries
 3 books and 2 video CDs
 Authentic and trained sales consultants
 Customers problems solved on 1:1
interaction
 Easy to navigate website UI with full details
 HD resolution photos and videos of products
 Commercials on Star TV and
ZEE TV
 Simple ads to disseminate
info – INFOMERICALS
 No false promises
 Spending is only 1 – 1.5
% of revenues turnover
 500k followers on twitter
 6 million Facebook page likes
 50k subscribers for YouTube
channel
 11 million views on YouTube
channel
 Language – Hindi and English
 Regular updates and replies

13. 0
5
10
15
20
25
30
35
40
Product
Discount%
Patanjali vs Competitors Price Comparison
Chyawanprash Juice Ghee honey
Facewash Shampoo Toothpaste Bathing Soap
Cornflakes Detergent
How is it possible?
Impact?
Why such low pricing?
 Business Philosophy – “Upkar and Not Vyapar”
 Make in-roads in lower and lower middle class of society
 Low input costs of production
 Procurement of RM directly from farmers avoiding
middlemen
 Very Low administrative expenses-
Patanjali – 2% , Industry – 10 %
 Profit Margin – 11.3%
 Revenue – 2000 crores in FY 15
 Revenue expected in FY 16 is 5000 crore
e.g. Amla candies
PRODUCT
DEVELOPMENT – 3 PILLARS
1. COMPETITIVE PRICING
2. NATURAL RAW MATERIAL
3. INNOVATION

14. DISTRIBUTION SUPPLY CHAIN
Chikitsalyas
(1500)
 Patanjali tied up with Future Group in 2015
 Products to be sold in 245 Future Group stores pan
India
 Expected sales are 8 crores per month via these stores
Retailers
(over 300000)
Super
Distributors (72)
Arogya
Kendra (3500)
Distributors
(2000)
Supplier
• Collect RM from rural households
• Some money given to villages for building roads,
schools etc.
Producer
• Demand for different item is placed at Haridwar
• Items delivered to distribution centers through
Patanjali’s own transport
Consumer
• Products available at distribution centers/retail
outlets
• Certified doctors also available at Chikitsalyas
 No intermediaries at any stage
 Significant cost saving on commissions
DISTRIBUTION AND
SUPPLY CHAIN

15. DESI TAG
TIMING OF PRODUCT LAUNCH
HIRING POLICY
COMPANY CULTURE
 Emphasis on hiring expert people with domain knowledge
 Doesn’t hire MBAs or “Digital Ninjas”
 Preferred Degree – M.Sc. Biology or M.Sc. Pharma
 Started with Ayurvedic medicine – established
faith
 Next, health supplements and consumables –
cereals, wheat – “WoM publicity”
 Finally FMCG products – soaps, detergents,
cosmetics, baby care products etc.
 Appeal to Indianess – shun MNC
products
 “Swadeshi brand” – genuine and
pure
 Refused foreign investment to protect
desi tag
 Very professional but not profit
maximization
 Purpose driven – “reinvest in
society and nation”
 Spiritual Culture – no
smoking/drinking
 Dress code – white kurta
OTHER STRATEGIES

16. VALUE CHAIN
ANALYSIS

17. 01
03
04
02
FIRM INFRASTRUCTURE
HUMAN RESOURCE
MANAGEMENT TECHNOLOGY AND PRODUCT
DEVELOPMENT
PURCHASING,
LOGISTICS
PRODCUTION
DISTRIBUTION
MARKETING &
SALES
SERVICE
MARGIN
VALUE CHAIN
ANALYSIS

18. FIRM INFRASTRUCTURE
Mega marts are being built across the country
IDEA
VALUE CHAIN
ANALYSIS
Patanjali Food and Herbal Park Patanjali Herbal research Institute
Patanjali Yogapeeth Swami Shankardev Vanprastha Aashram
HUMAN RESOURCE MANAGEMENT
Average compensation 22,000 P. M.
High rates of hiring from other
FMCGs
Swadeshi Model, local talent not top tier
Non Smokers, not alcoholics,
Satvik
High emphasis on training, employee
work life balance – Spiritual not corporate
culture

19. VALUE CHAIN
ANALYSIS
TECHNOLOGY AND PRODUCT DEVELOPMENT
Technology transfer agreement with DRDO
Development Seabuckthorn
products
Cold arid agro animal technologies
Weather resistant, grown in
Green houses
Solar driers, low cost storage, high altitude farming
DRDO FICCI ATAC
initiative
Cash from yoga related activities reinvested in Product Development
PURCHASING & LOGISTICS
Providing a new lease of life to
packaging companies like
Essel Propak, Manjushree Technopack
and Dynaflex
PRODUCTION
1: 3.3 Finished goods : Raw material
Expansion to 32 processing units from 5
5 Crore tablets per day capacity

20. VALUE CHAIN
ANALYSIS
DISTRIBUTION
Own retail stores, tie up with Future Group
SALES AND MARKETING
Increase advertising spend
Agencies like McCann and Mudra
Direct Marketing and through the Medium of Yoga
and Sanskar Channel
Modern retail stores like Hypercity, Starbazar
Online Platform
SERVICES
Non-Residential Yoga Camps
Yoga Classes
Gurukul At Kishangarh Ghasera
Patanjali Cow-Science and Herbal Agriculture
Research Institute at Dharali, Uttarkashi
Patanjali Chikitsalaya-Patna
Indirectly run services : medical nature
MARGINS
20-25 per cent cost advantage
15-30 per cent cheaper than other branded competitio
fill a gap in the information asymmetry where in the
customer is unsure of the maximum benefits that
can be derived from FMCG products

21. FMCG IMPACT

22. $49 Billion – Equal mix of branded and
unbranded products
Growth has slowed down in the past 3 years
due to GDP, Inflation, low IIP and No SKU
innovation or refinement of Supply Chain
Growth picking up in 2015-16 back with 7th
pay commission, global oil glut and rising
GDP
Top players by Market Capitalization are HUL
and ITC
FMCG IMPACT
INDIAN FMCG INDUSTRY 1
2
3
4
Price:
• 8-77% aggressively priced over market
leaders
• Emami and Dabur share prices fell
Colgate Palmolive downgraded to Neutral
on Toothpaste losses
Product:
• Product piggybacking like PowerVita and
Atta Noodles
• Increasing the size of the Ayurveda pie –
Indulekha + Ayush = HUL
Sri Sri Ayurveda
Promotion:
• Below the Line through Happening Haryana
• Pushing Himalaya and Dabur into creative
marketing
Place:
• ‘Patanjali Destinations’ – Future Group
• INR 10 billion at Big Bazaar against INR 13
billion by HUL

23. THANK YOU