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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.

WOW Marketing

In today’s competitive world there are so many options for a consumer that he is spoilt for choice. Today differentiation between products is very fine and it’s the one with better articulated claims that actually wins the share.

Spends on marketing are increasing relatively in comparison to spends on R&D. This puts more pressure on the consumers in their decision-making process as they are now confused that which product has an edge. Most brands are extremely proactive to make sure one-upmanship w.r.t other brands by constantly updating their communication. Some companies have also taken marketing as their new R&D. Ideally both the functions are part of the same coin as R&D provides brilliant technical solutions and marketers introduce  brilliant creative ideas and customer insights into the new-product-development process.

In highly competitive industries, top brass  resist making R&D too dominant to dazzle customers with a steady stream of new products and the latest technologies. But this would mean significant investments in NPD and even more investments in the marketing of those products. Therefore role of marketing is extremely important to keep the organization abreast with the market and its future trends. But that being said a brilliant idea or proposal can come from anywhere and R&D also needs to constantly updating their knowledge via any sources to come up with new breakthrough innovations.

But I think what’s missing in this race of gaining market share is the end benefit for the consumer as brands push for market share and equity scores. Select organizations actually deliver products or services that actually resolve a real consumer problem.

But I think for any brand to be successful the first thing they need to do is define why do they exist and more importantly how can they resolve a real consumer problem. Take an example of Uber in 2008, Travis Kalanick and Garrett Camp had trouble hailing a cab. So they came up with a simple idea—tap a button, get a ride.



What they started as an app now has taken the globe by surprise that empires can be built atop a great insightful idea with literally no investment. Uber is now changing the way we travel today across major cities around the world. When you make transportation as reliable as running water, everyone benefits. Especially when it’s snowing outside.

And if the insight is genuine that really resolves a problem incase of Uber of getting a cab during difficult times then there is no better brand ambassador for the brand. Business will follow without you breaking your head about how can I scale my business now.

mission_statement

Hence the mission is extremely important and then later it’s important to wow the consumer at every touch point. It would start with the communication which needs to hit the right chords emotionally and functionally to drive consideration. Post which there has to be a fantastic distribution to make sure availability and a good incentive for the sales channel to promote the brand. Then there has to be a wow offer or hook point at the point of sale to make sure that once the consumer is in to shop he is directed straight to the product and feels that the product has excellent value for money. Take an example of IKEA, their mission statement could have been a promise for beautiful, affordable furniture, but instead, they decided their mission is to make everyday life better for their customers. It’s a partnership: IKEA finds deals all over the world and buys in bulk, then we choose the furniture and pick it up at a self-service warehouse.

packaging 1

Next is the packaging which helps breaks clutter on the shelf and just does not look attractive but also functionally differentiates itself. Then comes the product itself that has to wow them the most via its efficacy or performance to make sure repeat purchases. In certain cases like electronics or automobiles after sales also plays an equally important role to push the decision-making.

packaging 2

And today there is more to this, consumer engagement that happens not just during the purchase cycle but post that as well in the form of updates and upgrades on the current product and secondly sharing relevant insightful content which today, is considered to be the biggest thing in Marketing. And one needs to wow the consumer here as well by being able to share the right content at the right time and today in the right medium as well.

content marketing

I know this is an ideal scenario and most marketers face resource crunch but we should in our capacity try to wow the consumer wherever we can to make it a memorable experience. The more pleasant experience, the better will be the brand pyramid. It takes time a lot of effort and patience to make this happen, and for this the learning or understanding of the consumer should never stop. Complacency is the brands worst enemy and will completely destroy all the goodwill created over time.

Converting Shoppers into Consumers Part 2

Don’t treat or see window shoppers are ticks who pile on, but see them as potential opportunity that they give you, to convince them to become your consumer.  Window shoppers are not actively seeking to buy stuff or don’t have that on their mind as of now but given the right push it doesn’t take long for them to become shoppers. Some of the key reasons why an person does window shopping:

They aren’t thinking of buying what you sell immediately but after sometime
They’re researching information before making an informed  decision
They’re considering multiple brands and are testing/checking each brand
They’re loyalists and want to just see what’s new in the brand

shopper in doubtOne of the keys things that can turn any window shopper to an real consumer is that if a brand can get them to take an action. If the shopper is actually forced to take an action and it could be as simple as taking a peek at the price tag or feeling the fabric or go online and research more about it, half the job’s done. And the focus on the call to action at every touch point is extremely crucial. And adding a call to action can be about different things at different touch points at POS it should shout buy now on the site it could be sign up the newsletter on a hoarding it could be visit the website, etc.

Brands should take one step at a time to make sure that overselling or brand dilution does not happen. Every touch point or communication needs to have specific aim and should build positive perception about the brand. To take a look at the example visit my earlier blog: http://wp.me/p6kIEO-29

Sampling in certain industries help to convert a lot of shoppers to real consumers. They key reason could be that the shopper isn’t sure of the benefits of using a particular brand and hence doesn’t find value for money. Or there are consumers who want the product to be accepted by earlier adopter and post looking at reviews they may buy the product. This brings in another critical aspect of marketing which is testimonial marketing which in today’s online world is one of the biggest promoters for the brand. The more positive comments the likelihood of the brand picked up is higher. Take an example of the hotel industry without looking at Tripadvisor ratings hotels aren’t being booked or hotels choices are changed basis their ratings.



If it’s the store a shopper can be converted to a consumer even by the most basic of human action of a greeting the consumer with a smile and wishing them. Still believe first impression is the last impression and if impressed while you enter the store then 20-25% of the selling is already done. Secondly treat every shopper as a potential consumer and not someone who will waste time. If this shopper doesn’t convert he/she will tell 10 people about the fantastic experience at the shop and other will come in and convert. Customer experience today has a lot of importance and not too many brands focus on this. Read another article on this at http://wp.me/p6kIEO-34

Finally if you know the shopper isn’t going to convert then the best thing to do is to counsel them about where he would get what he/she is looking for. This will build an extremely positive perception of the store/brand and is very likely to become your future consumer. Treating the shopper well and ensuring that he/she leaves a positive feeling will help the brand in the long run. But do remember to get contact details so that the brand could be in touch via various online mediums and keep the shopper engaged with the brand.

Confused shopper

Some key aspects that the sales/customer facing teams need to have particular focus on

-Highlighting the USP of the brand/product which helps in a better conversion rate
-Ensure that there is uniform experience (not pitch) across different people in the team (not being robotic but hygiene factors to be standard)
-Always have a how can I help you attitude keeping in mind consumers demands/needs rather than what I offer to sell.
-Dynamic sales pitch, although everyone knows about it but seldom practice it.

-Most importantly teams to understand and share learning’s on why the product/brand isn’t selling

Considering these basics and ensuring that these points are implemented with proper tracking will definitely convert more shoppers into consumers for brands.

Converting shoppers into consumers Part 1

Before we get into how we can get to convert a shopper into a consumer or buyer lets understand the basic difference between a shopper and a consumer. Every consumer is a shopper just before he/she became a consumer. The true difference is that a consumer has picked up a particular brand/product since he/she is confident about the product/service performance over other competing product/service. The shopper represents why he/she enters a category where a consumer represents why he/she has bought a particular brand based on self-perception and attitude. But importantly the same person in everyday life is a consumer and a shopper and shifts back-and-forth between the two sides every day.

Let me start with my experience:

walk in the park

I was taking a leisurely walk in the park and it’s a perfect spring weather where leaves are flying and trees are swaying to the tune of the wind. And suddenly I got a whiff of pure coffee and when I looked around I found a small coffee-house just besides the park. I walked towards the coffee-house and the smell got stronger and better. The coffee-house has a small porch that has beautiful handcrafted wooden table and chairs for its customers and on the table it has a placard “Order a hot coffee and have a muffin of your choice free”. The moment I sat down a woman walks out with small coffee testers (one shot) of various coffee types and politely asks that “Sir would you want to try our different blends of coffee? And all of sudden I realized that from a leisurely walk I am now drinking hot coffee with muffins.



I think considering the situation the coffee shop owner is doing an amazing job at marketing his shop by understanding the consumers demand even before it creeps into his/her mind. Here he has actually turned a shopper into a consumer or a buyer. Now this seems all incidental and easy but I think is a planned strategy that perhaps even a non-well educated coffee shop owner executes well and gets his share of profits.

Imagine the things that could go wrong in the same situation as the owner as perfected his 4Ps to convert shoppers to consumers.

4ps

Visualize the coffee shop in a dilapidated condition with walls also not painted well and not outside sitting or porch. No one there to welcome the shopper or the woman who came in was an old woman who wasn’t dressed well. Or that the shop offered free muffins or the coffee tasting wasn’t there, now would you go and actually spend time there from your busy schedule……doubtful.

The shop owner perfected his art of making his shop desirable to perfection. He ensured that every touch point that the shopper interacts with is enticing him closer to make the deal. Let’s start right from the place, it was in such a place that it’s at the far end of the walking trail and the coffee smell came over to the walking trail. Secondly he has the shop made in a rustic way overlooking the park and importantly have a porch that it’s connected to nature with its wooden artistic chairs. Finally have a good-looking woman welcoming and the sampling with promotion that sealed the deal. Hence it’s not always about the big billboard or a TVC but if the basics are done, the right product sells.

Yes I know some may feel that there is no competition and hence no marketing needed but this is also a strategy I would call as Blue Ocean Strategy where the owner realized the potential of the area and setup shop there with competition he will have to start different activities to make sure his sales happens but still if the basics are wrong then marketing won’t help. Imagine having a coffee shop near the entrance of the park, would it really compete….am afraid not.

So from a shopper I became a consumer and now in fact am the brand ambassador for the coffee shop since I recommend all my friends and family that one should visit this park and at the end of the walking trail remember to visit that particular coffee shop.

Details of how to craft a plan to convert a shopper into a consumer in PART II of the blog.