Patanjali Ppt 4u4v66

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AND ITS EFFECT ON FMCG SECTOR PATANJALI BUSINESS MODEL

EGBT GROUP 7 SUSHIL KUMAR NOHWAR ASHISH TYAGI JATIN PRINCE MANCHANDA

COMPANY HISTORY

TIMELINE

1 2006

Established as a Pvt. Ltd. company

Hit revenues of Rs. 450 cr, 450 stores

PAL started as a small pharmacy in Haridwar

2 3

2012

1997

2010 The world’s largest food park opened

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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 .

TIMELINE

5 2015

Deals signed with Future Group and DRDO

2015 Hit revenues of Rs. 2,000 Cr., has 4000 stores

6 PRESENT

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

CURRENT SCENARIO

FACTS

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Food park is now spread over 150 acres

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~85% of products are manufactured by PAL in-house and only few products outsourced.

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.

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IDEA

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.

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Aug 2015: CLSA came out with a report titled “Wish you were listed, Patanjali Ayurved” and summarized the threat it presented to listed counterparts Patanjali's revenue > Dabur, Emami, Marico, and Godrej Consumer. Ghee is the biggest money spinner for Patanjali, contributing 3035% to its revenue, followed by healthcare (20%), and toothpaste Dant Kanti (8 %)

PAL has provided more than 2.00 Lac indirect employment

COMPANY ANALYSIS

SWOT ANALYSIS • 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 • Political Interference • Removal of import restrictions • Controversies

IDEA

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W Strengths

Threats

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Weakness

Opportunities

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• 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

SEGMENTATION

MARKETING MIX MODEL

PRICE Value Based Pricing Alignment of cost, customers & competitors. 02

PRODUCT All Existing Products and herbal products 01 for different diseases .

Demographic basis – Age groups from 15-64 Psychographic basis – Personality, lifestyle and class

PLACE Franchise Stores, Super/Hyper markets & Online marketplace 03

PROMOTION

Yoga Shivir, Youtube, 04 Social media Free media promotions

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

ANSOFF MATRIX EXISTING PRODUCTS

NEW MARKETS

EXISTIN G MARKETS

Market Penetration - Yoga Shows

- Spiritual lessons in ashram Market Development - Targeting youth and newly health conscious customers

NEW PRODUCTS Product development - Research in Ayurveda and herbal medicines

PRODUCT LIFE CYCLE Diversification - Cosmetics - FMCG products - Health Drinks

 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

BUSINESS STRATEGY

MARKETING AND BRAND BUILDING 03 ONLINE & OFFLINE SHOPPING EXPERIENCE  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

02 YOGA SHOWS  Pan India Yoga Shows  Broadcasted in 170 countries  3 books and 2 video CDs

01 PERSONAL BRANDING  Cult personality and charisma of Baba Ramdev  535 branches of Patanjali Yog Ashram

04 MENTS  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

05 SOCIAL MEDIA

 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

PRODUCT DEVELOPMENT – 3 PILLARS Patanjali vs Competitors Price Comparison

1. COMPETITIVE PRICING Why such low pricing?  Business Philosophy – “Upkar and Not Vyapar”

40 35

 Make in-roads in lower and lower middle class of society

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 Low input costs of production  Procurement of RM directly from farmers avoiding

middlemen

 Very Low istrative expenses-

Patanjali – 2% , Industry – 10 % Impact?

 Profit Margin – 11.3%  Revenue – 2000 crores in FY 15  Revenue expected in FY 16 is 5000 crore

2. NATURAL RAW MATERIAL 3. INNOVATION e.g. Amla candies

Discount %

How is it possible?

25 20 15 10 5 0 Product Chyawanprash

Juice

Ghee

honey

Facewash

Shampoo

Toothpaste

Bathing Soap

Cornflakes

Detergent

DISTRIBUTION AND SUPPLY CHAIN SUPPLY CHAIN

DISTRIBUTION Super Distributors (72)

Supplier

Chikitsalyas (1500)

Distributors (2000)

Arogya Kendra (3500)

Retailers (over 300000)  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

• Collect RM from rural households • Some money given to villages for building roads, schools etc.

• Demand for different item is placed at Haridwar • Items delivered to distribution centers through Patanjali’s own transport Producer

• Products available at distribution centers/retail outlets Consumer • Certified doctors also available at Chikitsalyas

 No intermediaries at any stage  Significant cost saving on commissions

OTHER STRATEGIES HIRING POLICY  Emphasis on hiring expert people with domain knowledge  Doesn’t hire MBAs or “Digital Ninjas”  Preferred Degree – M.Sc. Biology or M.Sc. Pharma

COMPANY CULTURE  Very professional but not profit maximization  Purpose driven – “reinvest in society and nation”  Spiritual Culture – no smoking/drinking  Dress code – white kurta

TIMING OF PRODUCT LAUNCH  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.

DESI TAG  Appeal to Indianess – shun MNC products  “Swadeshi brand” – genuine and pure  Refused foreign investment to protect desi tag

VALUE CHAIN ANALYSIS

ANALYSIS

FIRM INFRASTRUCTURE

PURCHASING, LOGISTICS

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PRODCUTION DISTRIBUTION

MARGIN

MARKETING & SALES SERVICE

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HUMAN RESOURCE MANAGEMENT

TECHNOLOGY AND PRODUCT DEVELOPMENT

ANALYSIS

FIRM INFRASTRUCTURE Mega marts are being built across the country 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 Non Smokers, not alcoholics, Satvik IDEA

Swadeshi Model, local talent not top tier High emphasis on training, employee work life balance – Spiritual not corporate culture

ANALYSIS

TECHNOLOGY AND PRODUCT DEVELOPMENT Technology transfer agreement with DRDO Development Seabuckthorn products Weather resistant, grown in Green houses

DRDO FICCI ATAC

Cold arid agro animal technologies Solar driers, low cost storage, high altitude farming Cash from yoga related activities reinvested in Product Development

initiative

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

ANALYSIS SALES AND MARKETING Increase advertising spend

DISTRIBUTION Own retail stores, tie up with Future Group

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

MARGINS 20-25 per cent cost advantage

Non-Residential Yoga Camps

15-30 per cent cheaper than other branded competiti

Yoga Classes

fill a gap in the information asymmetry where in the customer is unsure of the maximum benefits that can be derived from FMCG products

Gurukul At Kishangarh Ghasera Patanjali Cow-Science and Herbal Agriculture Research Institute at Dharali, Uttarkashi Patanjali Chikitsalaya-Patna Indirectly run services : medical nature

FMCG IMPACT

FMCG IMPACT INDIAN FMCG INDUSTRY

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$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

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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

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