What startups can learn from Patanjali: an FMCG empire

An FMCG empire which was nowhere in the radar of powerpoint analysis by big companies even few years ago. Today, the man and the brand are a phenomenon to reckon with. The brand in question is Patanjali whose products are found everywhere today – be it in local medicine shops or on the sites of e-commerce biggies like Amazon. Best-quality products, competitive prices, and a distribution chain that rivals some of the best industry players are only few of the feathers in this Yoga guru’s cap. All this with an unassuming aura that only Baba Ramdev can possess. Patanjali Ayurved Limited was started by Acharya Balkrishna, Baba Ramdev’s companion in 2007. The aim was to popularize Ayurveda, India’s ancient medical science.

With 15,000 exclusive outlets in India, Patanjali sells every product one can imagine being sold by rival brands. The products are healthy and organic and include products for personal care and food such as soaps, shampoos, dental care, balms, skin creams, biscuits, ghee, juices, honey, atta, mustard oil, masala, sugar, and many many more.

According to a survey by the IIFL, by FY20, Patanjali will have high market shares in categories such as honey (35%), ayurvedic medicine (35%) and ghee (33%) and will have eight categories with turnover greater than Rs 10 billion (Rs.1,000 crore).

Indeed, entrepreneurs have much to take away from the success of this man and his brand. Here we look at some of the key points for entrepreneurs to assimilate and build a similar if not better success story for their startups.

1) Build a great product
If you don’t have a product that satisfies some need, solves a problem and works (almost) as you claim – don’t bother about content or any other kind of marketing. It is more important to assess the consumer and build a great product. Only then should you bounce back and market it and apply other techniques. The high and mighty FMCG players are today deliberating on the rapid entry of brand Patanjali into the FMCG market. Initially, as it started off, it was just put aside as another “organic product selling” brand that was not even in the threat list of bigger players. Today, the company is technically equal to Emami brand, according to estimates. The idea is to build a great product first and then focus on other aspects.

Key Learning: Don’t aim to beat your competitors at the game, try changing the game for them instead!

2) Marketing
“We never had a business plan. We also don’t know markets or marketing,” says Acharya Balkrishna, managing director of Patanjali Ayurved, which began operations two decades ago. “But what we know is serving the people by providing them high-quality products at attractive prices.” They knew who their consumers were. With a very specific profile, the content marketing needed to revolve around consumers. These were products meant for a specific kind of lifestyle and not something to be endorsed by celebrities as something only they have the luxury to possess. With startups booming left, right, and centre, it is important to focus on who your consumers are and which is your market.

Key Learning: Focus on the need and then market the product to niche consumers.

3) Branding
Patanjali started off the branding exercise by diversifying from the yoga empire to FMCG. Patanjali has the advantage of being associated with a personality, Baba Ramdev, a yoga guru with a following of millions who popularizes this brand through his camps. When health-conscious customers were egged on to use Patanjali products, they never looked back. The products were ‘healthy’ substitutes. The brand, however, does not only survive on Baba Ramdev’s popularity or on some predetermined business model. Ramdev educated the masses about the evils of MNCs, how products made in India were better, corporate corruption and exploitation of farmers, how fertilizers and many chemicals used in daily products are cancerous, and so on and so forth. With enough reasons given, people were now free to explore his products. No shouting over rooftops about how great his products are. He just created the right environment for people to explore alternative and healthier products. Similarly, startups today must play the right cards at the right time.

The least expensive deal for Patanjali till now has been marketing and advertising. They rely largely on word-of-mouth via the yoga classes (1 lakh free yoga classes every day across the country). However, change is about to arrive in the form of roping in top advertising agencies like McCann and Mudra to roll out the next phase of expansion. Patanjali will also be launching its mobile app, which will allow consumers to locate nearby outlets that are selling Patanjali products and also facilitate online ordering

Brand equity of Patanjali products are built around yoga and the baba who practices and preaches the discipline. Obtain consumer trust first and brand reach will naturally follow. Baba Ramdev has over 500k twitter followers, and keeps them engaged with regular updates and replies. A successful entrepreneur believes in connecting with the people and leveraging his/her personality for the brand.

Key Learning: Leverage your skill set and educate consumers, they will eventually become your customers.

4) Right pricing
Foreign brands and MNCs reach only so far in a country were about 70% people live in rural and semi-urban areas. Their prices are also such that the common man may not be able to afford. Patanjali products actively endorse the “Make in India” philosophy and are low in price. According to a study, the Swadeshi brand is a big intimidating factor for many of the big players in the FMCG empire! Aggression on the price front is visible in all categories.

Key Learning: Price your product as per market affordability and competition

5) Optimism
Be persistent, but know when to pull back and when to go full steam ahead. Despite facing many challenges and roadblocks like Food department raids, Baba Ramdev did not give up on his optimism and the belief in his products and venture. He did so by lying low on some occasions and propelling himself to limelight in others. Handling a situation is what makes a winner different from a person who “almost tried”.

If you give up with a pessimistic approach, it will result in losing the trust of your customers too!

Key Learning: Never give-up!

6) Value to Consumer
Outside of Ramdev’s loyalists, many people are buying Patanjali for a ‘different’ product experience. This set of consumers desires quality, is not married to any particular brand, is rooted and balanced, and is swayed neither by spirituality nor by politics. But they still adore Ramdev products because of the value it offers to them. For the same category of products, consumers are exposed to hundred ads per day. It is the value of the product that makes the difference in the long run.

Key Learning: What is the value to consumer offered by you? Why would loyalists turn and consider your product on face value?

Patanjali is also one of the bigger faces of the Make In India campaign and is a huge boost to this ideology. The International Yoga Week is another phenomenon that is aligned to the cause of leading a healthy life and who would be better to leverage the cause than Patanjali and Baba Ramdev?

Startups need to ensure that they understand the need for something, focus their product around it, endorse the brand and then focus on expanding.

We are proud that an enterprise like Patanjali has helped people to admire “Swadeshi” again!

This article was originally published here

Nikita Bhatia
Nikita Bhatia
Nikita Bhatia is the Co-Founder of VenturEasy, an online platform for Company Registration, Tax Consultancy, Trademark Registration, Annual Filings, Accounting and Business Compliances in India. A Chartered Accountant by profession, she has wide experience in the field of Audit, Accountancy, Taxation and Corporate Governance. Her exposure across a wide portion of economy gives her the edge to help startups scale up and guide them effectively in legal, compliances and tax related matters.

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