Journal of Critical Reviews ISSN- 2394-5125 Vol 7, Issue 12, 2020 PATANJALI: MISSED OR MESSED UP OPPORTUNITY? 1Dr. Kiran S Nair , 2Dr. Sapna Rakesh , 3Ankit Baranwal 1Assistant Professor of Management, Abu Dhabi School of Management Abu Dhabi, United Arab Emirates, [email protected]. 2Director, IMS Gazhiabad.India, [email protected] 3Faculty IMS Ghaziabad Uc campus. [email protected]. Received: 07.03.2020 Revised: 09.04.2020 Accepted: 10.05.2020 Abstract Patanjali Ayurved, a leading fast-moving consumer good (FMCG) company in India, was founded in 2003 and incorporated in 2006. Initially, the company manufactured ayurvedic medicines, but with the vast acceptance of Patanjali as a brand, the company launched other product categories, including beauty, hair, hygiene and food, with a focus on natural and swadesi (Indian) as the core essence of the brand. Acharya Balakrishna, the Managing Director of Patanjali and majority shareholder with a 92% stake, was concerned about the latest financial results for 2017-2018. After giving multinational corporations (MNCs) in India a run for their money in the past few years, the company’s financials showed a decline for the second consecutive year. In the 2018 financial year, the company barely achieved a turnover of USD 1.13 billion, versus USD 1.4 billion in the previous financial year. The company had reached a turning point: should they continue to expand and work towards reaching their USD 2.8 billion or determine if this target and their global ambitions were based on solid ground or pure ambition? Key Words : Marketing, Product,Price,Place, Promotion © 2020 by Advance Scientific Research. This is an open-access article under the CC BY license (http://creativecommons.org/licenses/by/4.0/) DOI: http://dx.doi.org/10.31838/jcr.07.12.64 INTRODUCTION AND BACKGROUND OF THE COMPANY. Ayurved research and development. It was from this In 1995, Baba Ramdev established the Divya Yog Mandir Trust organization that the brand Patanjali originated. with the help of Acharya Balkrishna and Acharya Karamveer to spread yoga and Ayurveda worldwide. In 2002, the spiritual TV THE PRODUCTS channel Sanskar signed Baba Ramdev to telecast a morning The Patanjali product portfolio included more than 2500 yoga program. Baba Ramdev’s Yoga became a huge hit in the products in various categories, including ayurvedic medicines, Hindi-speaking belt of India, which comprised a huge share of beauty and personal care products, baby products, daily the country's population. Another TV channel, ASTHA, grocery items, beverages and food products. Patanjali launched subsequently signed Baba Ramdev for its “divya yog” yoga over 300 medicines for the treatment of ailments and body program. This program made Baba Ramdev a household name conditions ranging from the common cold to chronic paralysis. across the country and also gave a big boost to Baba Ramdev’s The company launched 45 types of cosmetic products Yoga Shivirs (Camps). A typical Yoga Shivir comprised Yoga (saundarya) in different sizes and packaging like tubes and and Pranayam postures with Baba Ramdev explaining the boxes, including hair conditioner and foaming facial cleanser. benefits of each posture, the benefits of embracing Ayurved, Patanjali also forayed into the baby products category in the testimonials from people who had cured their terminal name of shishu care with 6 types of products. The products illnesses by practicing yoga and pranayama, singing patriotic were attractively packaged in convenient sizes for small pack songs and above all explaining the ill effects of MNCs and their size customers. Patanjali's grocery products were primarily products on the Indian economy and how the Indian economy sold under the Patanjali logo itself, and its food products would suffer due to the loss of Indian currency, ethics and included a wide range of rice; multigrain, normal, jow, chana, values under this external influence. bajra and navratan atta; pulses, spices, biscuits and namkeens (a salty Indian snack); and instant noodles. By the end of 2005, around 200 million people had experienced the yoga programs of Baba Ramdev. In 2006, Baba Ramdev and In all categories, the company claimed that its products were Acharya Balkrishna established the Patanjali Yogpeeth Trust in natural. In dental care, Patanjali's Dant Kanti toothpaste Haridwar to provide a comprehensive Pranayam and Ayurved became very popular and gave competitors like Colgate and experience. The primary objective of this yogpeeth was to HUL a run for their money, reaching a market share of 8.6 spread awareness of yoga, Ayurved and “swadeshi upchaar” by percent (2019). providing free treatment of diseases and by performing Sales Company/brand Market Share (2019) Rank 1. Colgate 49.4 2. HUL 16.4 3. Dabur 13 4. Patanjali 8.6 https://economictimes.indiatimes.com/industry/cons-products/fmcg/patanjali-eats-into-colgate-hul-share-in-oral-care- space/articleshow. Even in the slowed-down Indian market, Patanjali's results were not all bad. The comparison of 2019 with 2018 showed that the company did well in some categories and declined marginally in others. Journal of critical reviews 348 PATANJALI: MISSED OR MESSED UP OPPORTUNITY? Sales Rank Product category 2018 2019 1 Hair Care 3.4 2.9 2 Laundry Detergent 0.9 0.8 3 Face Care 2.9 2.4 4 Hand/Body Care 0.9 0.6 5 Toothpaste 7.8 8.8 6 Soaps 2.2 2.1 7 Noodles 1.1 1 Figures shown are the moving total average (MTA; average of Indian market, with 47000 retail outlets, 3500 distributors, the last 12 months on a rolling basis, which means that the 18 warehouses and 6 proposed factories. The products were MTA may change each month). initially marketed and promoted at Patanjali yoga camps, given that these camps were attended by a large number of https://economictimes.indiatimes.com/industry/services/ people who had ready acceptance of the brand. Gradually the retail/toothpaste-offers-Patanjali-some-relief-as-it-falters- company created formal channels for sales, warehouses, in-herbal- war/articleshow/71283886.cms distributors and retailers. http://Patanjaliayurved.org/presence-across-india.html PLACE Patanjali created a vast distribution channel to cater to the In the initial days of operations, raw materials were sourced The competition also readied itself to face this new challenge from local farmers, but as demand increased, it was difficult to and protect its depleting market share. In response to the continue this strategy, and the supply chains of a number of threat from Patanjali, competitors such as Hindustan Unilever products suffered. As a result, the company turned to third- and Colgate Palmolive India Ltd launched party production. However, the third-party production was ayurvedic/natural/herbal brands. HUL launched a range of handled by a variety of producers, which affected product Ayush products all centered around the natural Ayurveda quality and the perception of quality. theme. Colgate also launched its Vedshakti brand targeting Patanjali’s customers. These brands were designed to exploit These product delays also impacted retailing, as the lack of the frenzy over Patanjali’s natural herbal products. supplies led to demotivation among retailers. Retailers who had been happy with the rapid pace of Patanjali's growth In summary, Patanjali was a hyper startup: it grew rapidly started feeling the pinch of supply pressure, which impacted from nowhere to USD 1.4 billion. While it created processes their costs and profits. Stores that sold Patanjali products and systems to reach this revenue, managing an organization of exclusively faced both shortages and lost sales opportunities, this size required a sustainable and robust supply chain as consumers who were unable to make purchases due to mechanism, according to a market analyst. product unavailability did not return. According to a senior executive at a large retail chain, the fill rates of Patanjali PRICE products were in the range of 40-50 percent 2019. By Patanjali's products were priced 15-30% less than their comparison, multinational consumer goods companies such as competitors' due to lower spending on packaging, marketing, Nestlé and HUL had fill rates of 85-90 percent. The impact of marketing research, and employee salaries. This competitive these lost sales on the cash flow of the company also led pricing strategy helped the company make a mark in its product Patanjali to delay payments to its suppliers. In press reports in categories, but low-price strategies are very vulnerable to 2018, two managers at stores of leading Indian retailers said competitive pressure. The company started facing the heat as its that they were kept a handful of Patanjali products in stock due supplies came under pressure. Deficiencies in the quality and to faltering demand. The supply problems also impacted distribution of its products slowed its sales and earnings. Patanjali's sales through its two websites and tie-ins with Amazon, Flipkart, BigBasket, and grocers. “The threat has receded but it is more of a case of Patanjali having lost the plot,” said Milind Sarwate, former CFO of Marico Journal of critical reviews 349 PATANJALI: MISSED OR MESSED UP OPPORTUNITY? and now an independent director on several boards. “They such as atta, clarified butter, toothpaste and honey, the tried too many things. They have not looked at their growing in company received attention. However, other products that did scale at the back end. They succeeded in demand creation but not gain attention, like the baby product brand Shishu, faltered. not in demand fulfillment. They fell short of the institutional strength to sustain the rising volume. Their threat is definitely Branding lower because they had internal issues — supply not being on Having Baba Ramdev as its brand face allowed Patanjali to time, trade not happy with them”.