Tag Archives: branding

Patanjali – Rattling the Indian FMCG space

Today the Indian FMCG space is rattled by this new brand Patanjali and all the MNC are breaking their heads to figure how this baba could make so much in such short time which took them decades to build. Patanjali today clocks a staggering INR 2000 Cr and is on road to hit INR 5k Cr in 2016 and this is all in a space of 4 yrs. Now that’s growth 66% in topline in 2015 to hit the INR 2k Cr mark, no wonder it’s the fastest growing FMCG brand.

The Patanjali story began in 2003 with yoga with a channel called “Aastha Tv” where the early morning slot was done by Baba Ramdev, who would come every morning in a saffron dhoti, bare-chested, twisting and twirling his body to eye-popping angles, while elucidating on Yogic rituals. Baba Ramdev also conducted free yoga lessons, his easy-to-follow breathing techniques, combined with his friendly saint appearance made him connect with the mass followers.

Baba ramdev

The idea of monetizing his popularity came from his close associate Acharya Balkrishna where he envisioned the amalgamation of the yoga guru’s popularity with his knowledge of ancient Ayurveda. This brought about the birth of Patanjali Ayurved Limited that began manufacturing medicinal products and ventured into the market with its dental care, cosmetics, and food range products.



Headquartered out of Haridwar the holy town on the banks of Ganges Ramdev this began his journey from a yoga guru to a business tycoon with the end goal of reaching INR 1 trillion in sales in less than 10 yrs. Already Patanjali has recorded sales INR 2k Cr in 2015 and is on its way to hit INR 5k Cr in 2016. To give a perspective to this no Hindustan Unilever Ltd started in India in 1888 and in 2015 touched net sales of INR 32k Cr, that’s how fast this FMCG is growing. As per FICCI and KPMG this segment was projected to grow by 12-15% over the next 5 yrs and Patanjali targets to grow at almost 3-4 times this pace, that’s the ambition of Baba Ramdev.

patanjali financials

Ramdev openly ridicules his multinational competition.“It’s just the start. Ab tak Colgate ka toh gate khul gaya, Nestle ka toh panchhi urne wala hai, Pantene ka toh pant gila hone wala hai; aur do saal me, Unilever ka lever kharab ho jayega (By now, Colgate’s gate has opened; Nestle’s bird has flown (a reference to Nestle India Ltd’s logo), Pantene’s (a shampoo brand by Procter and Gamble India) pants are going to get wet, and in two years, Unilever’s lever will fail),” Ramdev said on 27 April at a press conference in Delhi.
patanjali vs fmcg
Patanjali’s focus would be on six areas: natural medicine, natural cosmetics, natural dairy products and food, natural cattle feed and feed supplements, bio-fertilizers and bio-pesticides, and natural indigenous seeds to meet that growth as per Ramdev.

And it’s not just about entering the right segment but also getting the distribution right, over the next year, Patanjali will increase its retail presence through 4,000 distributors, more than 10,000 company-owned outlets, 100 Patanjali-branded stores and supermarkets. They also plan to set up 6 more factories to make sure production is in line with sales to avoid stock outs.

Baba Ramdev has hit all the right buttons from a 4 Ps perspective as he has managed to get a good product based on ancient Ayurveda that people trust, extremely competitive prices, a good distribution and an expanding production line. And most importantly he has managed to converge the ayurved with the trust/faith people had on his name, which made Patanjali grow so big in such short time. Brands spends millions of dollars and years to build credibility but here Ramdev had that credibility already that took years to build and he just transferred that credibility to the products by endorsing them and by offering no side effect ayurved medicine.

Ramdev and followers

Business, Strategy & Management

And just to make sure that each Indian was exposed to his products Patanjali spent massively on their A&P spends. Their weekly ad insertions on television jumped 102% from 11,897 in the first week of January to 24,050 in the week ended 25 March, according to BARC. Ad insertions by Patanjali are 20% more than those by the next most-advertised brand on TV—Cadbury, a chocolate brand owned by Mondelez India Foods Pvt. Ltd.

Disruption is always good and in this era of startups and uberization every company’s wants to project that they are innovative but very few actually are disruptive. Patanjali Ayurveda Limited (PAL) scores high on creating a new market and beat competition on the pricing front as well. In a relatively crowded FMCG space dominated by the HULs and ITCs, PAL has emerged as a dark horse posing a serious challenge to the erstwhile barons.

Their goal of making products available to the consumer at the most reasonable price, and giving substantial discount to existing alternatives. The price differential itself may be enough for some consumers to make the shift and for those in the low income class to become loyal customers of the given product category. Given its significant price discounts vis-à-vis competitor brands, one wonders whether the competition will eventually cut prices to lock horns with the PAL challenge.

It will force the MNC counterparts to either lower prices of come up with low cost products which may be inferior in quality in comparison to Patanjali’s line up.
A mystic who started his journey by offering free yoga camps to the masses and strongly propagating ancient Ayurveda to the world, is today, the cause of a frown for many FMCG companies in India and globally.



But there is a twist in the tale this FMCG sector may be in for some more disruption as after Baba Ramdev’s Patanjali, Sri Sri Ravi Shankar’s Sri Sri Ayurveda (SSA) products will now make the going tougher for the existing consumer players and for Patanjali as well.
Sri Sri is yet another more popular monk who has entered this market in 2003 and plans to roll out the same way as Patanjali. This may spell doom for existing players if they don’t act quickly. Sri Sri has 37 crore followers, estimated to be more than five times that of Baba Ramdev, owner of the Patanjali brand. Sri Sri has products across categories such as breakfast cereals, health drinks, oil, spices, personal care, oral care, cookies and ready-to-cook items. But unlike Patanjali, which has a strong presence, SSA has still to develop a network that can sell its products.

baba ramdev and sri sri

Other spiritual gurus such as Sadhguru Jaggi Vasudev, Guru Ram Rahim and Aurobindo Ashram are planning to take the same route to exploit this lucrative segment and I look forward to this and the answer that the MNC giants have to give. This I feel will be the true test for these MNC giants which may lead to consolidation in the industry or some players leaving the playground has to be closely watched.

Co-branded Marketing, is it the in thing?

 The Unilever Yum Brands Tie-up 

kissan and pizza hut

Co-branding as a concept has been around for years, but recently we have witnessed considerable activities in this space. But still relatively this is an unused strategy, that helps  boost revenues and brand equity scores for their respective brands that tie-up.
This recent tie up of behemoths Unilever and Yum Brands via their respective brands Pizza Hut and Kissan is a live example of co-branding and executed well via multiple mediums like TVC, POS, etc in the market.
Co-branding is increasingly becoming important as a marketing strategy, as it allows brands to combine their strengths and loyal customer bases, while sharing advertising and promotional expenses to get a better ROMI. With this kind of strategy one brand gets exposed to the consumers of the other brand and increase their prospective consumer base instantly.  More importantly each brand gets a massive sampling via the other brand which if done via the traditional route would cost millions that mean more cost efficiencies.

nike_apple

Why Pizza Hut and Kissan decide to Co-Brand? To start off, both the brands are popular and one of the strongest brands in the food industry which makes them an even match. It’s a powerful way of introducing one company’s products and services to the loyalists of another.



Co-branding also help a brand to get some brand equity rub off from the other brand to oneself, in the current case both signify quality food and naturalness both the brand compliment each other very well. In some cases, companies co-brand to charge a premium, such as Ford’s (F) two-decade partnership with Eddie Bauer and its more recent creation of the “450 horsepower supercharged Ford F-150 Harley-Davidson Super Crew” with an MRP of more than $42,000.

Harley and Ford

Co-branding is an often-overlooked strategy by which the whole can truly be greater than the sum of the parts. While it should be used sparingly and judiciously, it could generate a new level of interest and excitement around your products and services. In this case I truly believe it’s a good fit as in India Pizza is not complete without the tomato ketchup. It’s not just a matter of having the correct brand fit but sometimes it’s also about organization/brand beliefs and goals that may help unite 2 brands.

Evolution of Marketing

All of this started during the pre-industrial revolution during the 18th century where everything was hand-made and was made to order. Barter of goods and services was the way, trade operated in those times. This was known as the trade era where traders had an upper hand in selling stuff for a margin in terms of getting upgraded products/services in return for their offerings.
 
Then came the production era where mass production was the name of the game. One size fits all was thought that all believed in and the belief that “people buy what we make”, it worked well especially considering that there was no or extremely limited competition. This era lasted from industrial revolution from 1860’s to early 19th century.
 
Following the production era was the era where sales played a pivotal role in the industry forming it the sales era. Due to the mass production markets got saturated which resulted in product demand plummet. More and more companies entered into the production era and commoditized the market making it difficult for the companies to sell their products as there was hardly any differentiation. Pricing played a pivotal role in convincing the consumers to buy products from a particular manufacturer. This era lasted till the middle of 19th century.



 
After sales era there was dire need for the companies to give the consumers products that they needed rather than what they could make. This innate need started the era of marketing where companies realized that consumers now had multiple options and they would need to differentiate their products from other manufacturers. In other words real branding started emerging during this phase where all companies started targeting certain segments in the society to ensure that they catered needs of that particular segment through their product/services. Later on during the same era customization also played a key role and changed the way companies made products. Businesses existed because they fulfilled some unmet consumer need, and they realized that consumer is now the king who needs to be served with what he wants and how he wants.
 
And today in the marketing era the role of digital marketing is not just a fad but whole new way of reaching and engaging consumers. A couple of years back, large companies mandated the use of this medium and allocated specific budget like 10% of the total media spends have to be on digital but today, the medium has not just proved itself but redefined how marketing has to be done. I would say it has enabled marketers to achieve individual marketing rather than segment/mass marketing. With the help of tools made by companies/brands like Google, FB, etc it has enabled marketers to market their products and services to an extremely specific set of people which is the IDEAL TG. Products and services are now being launched online and that launch has a much better impact / result as compared to traditional launch since it reaches the right audience, in time and is completely measurable. A simple e.g. to showcase importance of this medium is to see any established company today when they dish out a role for a brand manager / marketing manager it has a mention of a particular skill-set i.e. Digital Marketing.
 
 
I think the future of marketing will be something where consumers will try and create products themselves by just customizing everything. Depending on he consumer preferences which is tracked by Google and many other companies marketers could show them creatives that they are more likely to get influenced from. Although this may be an expensive proposition of creating multiple edits but if we look at the end result I think the effort will really lend value as it will generate higher sales.

Advertising in particular works

Advertisers crave to get captive audience so they can brainwash them and put their brand messages in their heads. To get this captive audience they would got to any length but today the consumers are exposed to so many messages during a day that they would tune out of certain experiences even if they like it.

Take any medium today, the consumers are given an option to escape from this, in a TV by skipping to other channels, skip the ad in YouTube, FB asking for permissions, tv channels now promoting 1 break program, etc. All moving to give the consumer the much-needed space.



In a way, this reinforces the definition of ads as unwanted interruptions. For e.g. at YouTube they put a forced 5 sec ad viewing but then skip the ad to go past it. The other way to look at it is that challenges the advertisers to create fantastic ads so that people choose to watch them.

I guess the more generic the ad is, it is less likely to get any attention or stick-ability. I read somewhere that “People hate advertising in general, but they love advertising in particular”.

All marketeers love to get new mediums/channels where they can get a set of their captive consumers but do not pay equal attention to the kind of messaging/creative they want to put in those mediums. Where everything in marketing is measured any creative messaging how much ever you test or try to understand will always remain subjective. Companies spend millions of dollars testing communication still aren’t able to crack and get the desired response but at least they are close to what they want to achieve. But there are certain companies who go with the gut feel execute campaigns online and offline and clearly when the consumer has his first look their first thought would be “what the hell are they trying to say with this one?”

No wonder most of the marketing dollars spent are in vain and then the conclusion is always that strategies were either not planned properly or executed properly.

Just feel that out of the box thinking should not only be applicable to mediums but also to the messaging that goes out in those mediums.

Marketing V/S Branding

Tricky question for most, but the answer to this question of how marketing is different from branding and vice versa is that for most people both are one and the same.

But I think the answer lies in both the terms itself. Just remove the last 3 letters from both words (ing) and think for a minute what both words stand for …….

Am sure you would have guessed the answers by now….



In my view a market is full of brands (branded products) and unbranded products but a brand is a distinct individual identity in market. Marketing makes brands which means brands are derived from marketing. A lot of established and well to do companies have designations of brand managers and marketing managers but in reality there is negligible difference in both roles.

A role of a marketing manager is much richer as compared to brand manager but still people take pride in saying I am a brand manager as compared to a marketing manager..