PATANJALI-A SENSATION IN INDIAN FMCG MARKET

Founded in 2006 by Acharya Balkrishna and yogguru Baba Ramdev, Patanjali Ayurveda is an Indian FMCG Company. Patanjali Ayurveda happens to be the fastest growing FMCG Company in India. Patanjali Ayurveda imports herbs from Himalayas of Nepal.

Patanjali has a manufacturing unit in Nepal, working under the brand name of Nepal Gramudhyog. India’s fastest growing FMCG Company is valued at 3000Crore and generated revenue of 5000Crore for the fiscal year of 2015-16.

Hindustan Uniliver and P&G are the FMCG companies, whose market share has been potentially affected by Patanjali. In a short span of less than a decade, It is giving a tough competition to P&G and Hindustan Uniliver. Many companies like HUL, P&G, Dabur, and Himalaya are on back foot and trying to regain their customers back by providing huge discounts and impressive offers.

ADVANTAGES OF HAVING BABA RAMDEV

v  Patanjali has a major advantage as it is associated with a famous personality, “Baba Ramdev - a yoga guru”, who has a fan following of millions of people who directly popularize this brand through yoga camp. His direct interaction with consumers helped him promote the brand internationally.

v  Baba Ramdev is the brand that helped the brand grows with a very low advertising expenditure. Promotion of Patanjali is directly done by Baba Ramdev. Recently he was seen promoting his brand in Kapil Sharma’s Show and even in a reality show India’s best dramebaaz which has also been sponsored by Patanjali. He thinks brand will double its revenue to Rs.10000crores from 5000crores in India by the end of 2017.

PATANJALI’S MARKETING STRATEGIES THAT LEAD IT TO SUCCESS:

v  LESS PRICE: Patanjali products are available at an attractive discount as compared to their competition. It sources products directly from farmers and cuts on middlemen to boost profits. Hence, they are able to reduce their raw material procurement cost and are able to produce goods at a much cheaper price. Currently, Patanjali is making 20% operating profit which is higher than the industry average.

v  STRONG DISTRIBUTION CHANNEL: The distribution channel of Patanjali is very strong and big. They sold products through three medical centers and even through nonmedical centers. The products are available online and even on retail shops. The plan is to grow 1lakh outlets in next few years.

v  SIMPLE PACKAGING THAT GIVES IT A NATURAL LOOK: Patanjali sells its product with a very simple packaging. With a product like Patanjali, where the message is to promote ‘Ayurveda’ and ‘Health’, simple packaging can be a very effective way of promotion and that is why the company is able to do miracles with its simple yet effective packaging. With a ‘natural’ look (especially with leaves and herbs), consumers get a feeling of health and wellness and they are attracted to buy the product.

v  WORD OF MOUTH PROMOTION: When a new company gets into the business, this spending is significantly higher. During the introduction stage, Patanjali followed a unique word-of-mouth publicity model and the entire revenue was without any advertising. It was because of the brand loyalty of its customers that the word-of-mouth promotion proved so successful for the company.

v  STRONG BRAND ASSOCIATION WITH HEALTH: Patanjali is able to create a brand perception of health and wellness among the Indian masses, primarily because of Baba Ramdev’s association with the brand who is considered to be a veteran of yoga. Hence, more people are getting attracted to Patanjali’s products and are re-buying products more frequently.

Patanjali has given a headache to many marketers with its different ways of marketing. It has disrupted the whole FMCG sector and bought a revolution in the industry in a very short span of time. A point to note is that many people are buying Patanjali products due to the value attached to the products. Hence it is attracting brand loyal customers and not price sensitive customers.

Will Patanjali continue to grow at the same pace and prove to be a dark horse in the race? Or will it prove to be a water bubble, with this being a temporary phase for Patanjali and strong players eventually coming up with strategies to recapture the lost market share? Only time will tell.

REPOSTIONING VERSUS REBRANDING

As Companies grow product line expand and market condition changes, sometimes Business Owners find themselves with a Company brand image who no longer reflects “What they are and what they do”. So they came out with a new product, or started doing business in a new market, we can say in Niche market, and try to build their entire company identity around it – and then business serves in a new, bigger, different or diverse customer base.

WHAT TO DO?

 A reason for this is a Company needs to explain what it really does. Or when an Owner says “We are more than just (……).At this point a new brand strategy takes place. But a question arise “Do the Owner needs to Reposition its company or completely Rebrand it?”

REPOSITIONING V/S REBRANDING

Reposition if the company name is right but the message and/ or image is wrong:

Repositioning is something that required when a Company’s offerings, mission statement or goals have changed. It focuses on changing what customers associate with the brand and sometimes competing brand. It’s a change in the brand promise and its personality.

Apple could be the best example of brand repositioning. It was a computer company in the 80s and 90s. It expanded beyond its original core product. They simply dropped the word “Computer” and shifted the message to “Think different” They no longer position their brand as a “computer company” but more as a cool digital lifestyle provider.

Rebrand if a company name causes confusion:

Rebranding comes into play when the original company identity has grown outdated, confusing or outright misleading. It usually includes a change in name, logo, and tagline, essentially creating a new brand on the foundation of the old one.

KFC could be the best example of Rebranding. Kentucky Fried Chicken successfully rebranded as KFC in 1991 in a bid to reduce consumer brand association with fried foods. The brand, however, rebranded again in 2015. But with this one, the company hopes to get closer to its original Kentucky Fried Chicken founder, Colonel Saunders and his famous recipes, and to communicate to its costumers the realness of the story.

                                               

 Both repositioning and rebranding give Companies a chance to put their brand front and center in customers’ minds. Making a change can be difficult, but if they choose the right path for their company, a little change can make a big difference in how customers see them–and how they see themselves.

FACTORS AFFECTING PRICING OF A PRODUCT

Being competitive in today’s marketplace requires competitive content and competitive pricing. Competition is the final price determinant, if a company sets competitive pricing by analyzing the market conditions then it will definitely earns good profit. So pricing plays a very important role in any business for its existence. Because in today’s World businesses are dependent on customers. He is not an interruption on work; he is the purpose of it. He is not the outsider to the business, he is part of it. Businessmen are not doing him a favor by serving him; even he is doing a favor on them by giving the opportunity to do it. So a customer will not pay a penny more than the true value of the product.

So the moment a Company makes a mistake in pricing, it has to suffer losses and its market share will also get affected. But keeping only the pricing objective is not enough. A company has to look from wider view and analyze the other factors of marketing mix, such as nature of its offering, Product life Cycle, promotion and distribution etc.

MAJOR FACTORS AFFECTING THE PRICE OF A PRODUCT ARE:

INTERNAL FACTORS:-

·         COST: While determining the price of a product, the firm should consider the cost involved in producing the product. It must able to cover its both Variable cost and Fixed cost while deciding the price.

·         IMAGE OF THE FIRM: The pricing of a product should also be on the basis of a firm’s image, if it is a startup or it doesn’t has recognition than its pricing of a product should be low not high as compared to HUL or P&G, because they enjoy the goodwill in the market.

·         PRODUCT DIFFERENTIATION: The price of a product is also depend on its characteristics. Ifa product is able to add value, quality, size, color, attractive package then only it will attract the customers, and they will be ready to pay higher price.

·         MARKETING MIX: Pricing is one of the factor of Marketing Mix. But change in any of the remaining 3P’s ie. Production, promotion, and place will also effect, so pricing should be done after proper Marketing Mix.

EXTERNAL FACTORS:-

·         DEMAND: One of the major external factors is demand of the product. It is effected by factors like number and size of the competitors, the buyers, their capacity to pay, their preferences etc. should be examined carefully before deciding the price.

·         COMPETITIORS: How competitors price and sell their product will have a tremendous effect on pricing. So while fixing the price of a product, the firm should study the market and the degree of the competition exist there. If the competition is high then the price of a product should be below to face the completion, and if its low then the price should be high.

·         GOVERNMENT LAWS AND REGULATIONS: Regulations are designed to protect consumers, promote competition, and encourage ethical and fair behavior by businesses. The factors like interest rates, taxes and unemployment levels. When the economy is weak and many people are unemployed, companies often lower their prices. In international markets, currency exchange rates also affect pricing decisions.

·         CHANNEL INTERMEDIARIES: Before deciding the price of a product the marketer must consider a number of channel intermediaries and their expectations. The longer the chain of intermediaries, the higher would be the prices of the goods.

·         CUSTOMERS: Companies must try to determine how price sensitive customers are. Will customers buy the product, given its price? Or will they believe the value is not equal to the cost and choose an alternative or decide they can do without the product or service? Equally important is how much buyers are willing to pay for the offering.

Therefore Profit is not something to end on the end, it is something to plan for in the beginning. So these all are the important factors which affects the pricing of a product. So a firm should analyze all the factors before deciding the price of the product.

ASPECTS OF PRODUCT PORTFOLIO MANAGEMENT

Imagine a company has six products, how should it allocate its limited marketing resources among them? Should It invest in each product equally or emphasize just a few? Which ones? Why those? These all requires a systematic Product Portfolio Management. SO welcome to the world of product portfolio management.

Product portfolio management helps Companies make better resource allocation, marketing activity, and product strategy decisions by providing an overall picture of both the present and future projects   market position for every products.

A product portfolio comprise of different categories of products, different product lines and finally the single product itself. Management is needed on all the three levels of a product portfolio. A Company needs managers for managing individual products, managing product lines and finally the top level management which manages the complete portfolio.

Let’s look an organization from a wider view. An organization is comprised of a number of different departments, and all focused towards one goal – the betterment of the organization. In the same manner, product portfolio of a Company should be such that each and every product in the portfolio is focused towards one goal – Bringing the organization on top by optimally using the resources available.

ASPECTS OF PRODUCT PORTFOLIO  MANAGEMENT

·         Maximize  the  value of products:

Different products of the Company generate different profits.

·         Identify the optimal product mix:

A portfolio that spans multiple market segments, product categories, and technologies helps protects the company against marketplace changes. Investing the returns from current products into longer-term products helps stabilize company’s returns over time. Established, low-risk products help offset your riskier ones.

·         Ensure internal strategic alignment:

 Company’s success is in danger if its product portfolio fails to support  broader business strategies, priorities and objectives; both today and in the immediate future.

·         Allocate resources properly:

 Companies have limited human and financial resources. Investing in the right products has an immediate and significant impact on profitability

BENEFITS OF PRODUCT PORTFOLIO MANAGEMENT:

•   It maximizes the return on product innovation investment.
•    It maintains the competitive position.
•    It helps the Company in using its scarce resources with optimum utilization.
•     It helps in achieving balance
•     It enables objective project selection. 

IMPORTANCE OF PORTFOLIO MANAGEMENT:

A company without proper Product Portfolio Management and project selection face problem may be of slower growth rate. So if a new product development faces any plague its all because of ineffective Product portfolio Management.

Thus Portfolio Management is about doing the right projects. If the Company pick the right projects, the result is an enviable portfolio of high value projects: a portfolio that is properly balanced and most importantly, supports the business strategy