Patanjali Case Study
All the success, the popularity, and the goodwill can be credited to something we refer to as the “Incidental Branding”.
The branding wasn’t accidental. It was well planned. But there were a lot of incidents that shaped the brand personality and that too happened before its formation. The brand ambassador (who surprisingly has no equity in the business) is the reason the ‘brand’ happened. Mind it that I’m referring to the brand and not the business. Hence Baba Ramdev’s Patanjali.
But how a holy man, who doesn’t even know the basic marketing strategies, who did nothing but yoga all his life, could make all the market leaders sweat?
Reason Behind Patanjali’s Success
It all started in 2002 when Baba Ramdev’s mass yoga …show more content…
Baba Ramdev was successful in making a ₹3000 crore company just by his own name. But this could backfire on him as well. His every action, every social media post, every word he speak has been associated with the brand and hence Baba Brand has to be a bit more cautious in everything he do, speak, eat, type, or wear.
Patanjali Ayurved, started in 2006 by the famous Yoga Guru Baba Ramdev, has seen a meteoric rise in the past few years with revenues of ₹5,000 crore in FY16 from ₹450 crore in FY12. While Patanjali’s combination of low prices, ‘natural and pure’ proposition and ‘swadeshi’ positioning are widely acknowledged to be the reasons behind success, what is not that well known is the critical role played by Patanjali’s path-breaking sales and distribution strategy in driving this exceptional growth trajectory.
Patanjali can offer low prices to consumers due to very low selling, administrative and general costs at 2.5 per cent of revenues. Advertising spend in FY 16 at 6 per cent is also well below the peer set. Critically, it has kept retail margins at half or lower levels as compared to competition. The focus of the article is to demystify how Patanjali scaled up distribution in an intensely competitive retail FMCG environment in India despite low retail and A&P spends.
Distribution …show more content…
Select players have adopted a “flanker” strategy to bypass competition, entrench their position, encircle and then launch a frontal attack in mainstream channels.
Notable examples include Starbucks’ consumer packaged goods (CPG) business. Starbucks leveraged its retail store footprint to build a flourishing CPG business. The intent was to capture a larger share of coffee consumption – reaching consumers whenever they want great coffee.
The stores provided a perfect platform to drive effective sampling and build partnerships with retail consumers. Starbucks then enhanced availability through a tie-up with the CPG giant Kraft. Today, with its own network, these at-home consumption products are now available in grocery stores, airports, hotels, and convenience stores as well.
In the case of Yellow Diamond Wafers, the company targeted a relatively lesser contested space – smaller mom-and-pop retailers within the intensely competitive wafers market. Yellow Diamond also provided higher margins than competition to ensure a very high shop share with those retailers. In six years, Yellow Diamond grew to ₹700 crore. Yellow Diamond is now planning to enter the more mainstream bigger