The rise of Patanjali has been remarkable: with a staggering CAGR of over 80%, it has grown in sales from Rs 450 crore to Rs 5000 crore in just four years, and is aiming to double its revenues to Rs 10,000 crore in this fiscal. Unlike typical growth strategies that involve product extensions and phased expansions, Patanjali seem to be growing in an apparently “all over the place” manner. The swadeshi-driven, baba-endorsed brand has challenged the thought processes of many MBAs and management gurus, and has forced traditional consumer product companies back to the drawing board. A slew of imitators ranging from Sri Sri Ravi Shankar to Ram Rahim are attempting to jump onto the consumer products bandwagon. The principles Patanjali has been built on are as remarkable as its growth.They force industry participants to redraw mental boundaries, adjust or abandon conventional frameworks. While there is a tendency to associate the brand’s success with yoga, Ayurveda, or its saffron-clad brand ambassador, conversations with many insiders who have been involved with the firm in different capacities suggest that the business has been built around five counter-principles of brand management, overlooked by conventional managers:
1. Find Your Brand’s Infinity
Brand managers are often blindsided by keywords that sound intuitive but mean little. A case in point is brand equity. While the term has become an integral part of marketing conversation, few actually think about what it encompasses and whether it helps or hinders marketing. The term “equity” is particularly appealing in this era of assigning financial value to everything. A number of methodologies attempt to convert the notional value of brands into a measurable asset that can figure in financial statements, in accordance with generally accepted accounting principles. However, Patanjali has exposed this fallacy by showcasing that brands have unlimited potential that can be leveraged across numerous categories over time. Attempts to put a financial value based on a brand’s current strategy might severely under-estimate its true potential, irrespective of the accounting methodology. Instead of chasing brand equity, marketers should be chasing brand infinity and executing strategies to build unlimited potential. With existing products such as Patanjali pasta, and plans to launch ‘Swadeshi’ Jeans, it has proved that brand equity is a misnomer and marketers who rely on it are staring at a mirage whose label has been cleverly branded.
2. Find Your Brand’s Zero
Marketers also believe in the power of free products and services, using them to attract prospects and convert them into paying customers. However, the cost of providing these to customers is often nonzero, because of which there is no guarantee that these strategies will pay off. Instead, Patanjali has taken the ‘power of zero’ to another level by building permanence into its promotional system. It provides free Ayurvedic consultation at more than 1,500 Patanjali exclusive stores. These lead to increased footfall and repeat purchases, but also create markets for FMCG products and provide below the line marketing opportunities for local yoga events and magazine subscriptions. The free service engine runs at all times and the firm does not directly bear the ‘cost of zero.’ Although, consultation is free for customers, Patanjali charges its store owners, about Rs 10,000 – Rs 15,000 per month for trained doctors. As a result, the brand is able to find its zero at no cost, something most marketers struggle to accomplish.
3. Build your Brand’s Factory
Patanjali has shown that crafting a brand is quite different from structuring a branded business. It might be useful to instead consider it a design and engineering task. Much like an engineer optimises the features of a product by adding and subtracting ingredients, a brand manager should optimise the values embodied in a brand’s associations by adding the appropriate and deleting the redundant. Brand building should rise above the superficial and naïve world of colours, logos, visuals, and music and migrate towards a scientific world of outcome-based design. More important, a firm has to decide the legs on which its branded business would stand. Patanjali’s branded business has strong legs that go far beyond the charisma of its ambassador. It is anchored in its extensive manufacturing facilities in Uttarakhand, ultra-competitive pricing, strong retail infrastructure, and a bandwagon of believers.
4. Build Believers Not Promoters
Today, it has become fashionable to track how much customers like your brand using metrics such as customer satisfaction or net promoter scores. An assumption that is typically unverified, is that a brand’s franchise can be extended through word of mouth from those who have had a positive experience. This chase for promoters has driven brands to over invest in customerfacing operations which may or may not have the desired effect on bottom line. Patanjali, on the other hand, has been built on a foundation of believers.
It all started in 2003, when the Astha channel began airing Baba Ramdev’s yoga sessions. This was supplemented by yoga camps, free consultations, and extensive point of sale promotions. Now, with an established brand foundation and large product portfolio, Patanjali has emerged as one of the largest advertisers in India. It is building an army of believers directly, rather than pinning its hope on promoters who may or may not exist and whose behavior may be unpredictable. In addition, Patanajali sells through exclusive franchise stores and provides zero credit. Contrary to industry practice, every product is paid in advance by the franchised store owners. This works out because the supply chain members: distributors, store owners, and customers are all ardent fans of the brand, its ambassadors, yoga, Ayurveda, and the swadeshi concept. This base of believers prevents brand encroachment, enables favorable credit terms, and creates a motivated internal workforce and external collaborators such as swadeshi-driven Future Group’s Kishore Biyani.
5. Ride the Wave, not the Ripples
Most marketers begin with the idea that customers are different. Electronic retailing, and the ability to track individual behavior has actively promoted the idea of a ‘segment of one’. The addition of big data and analytics has brought hyper-segmentation to a crescendo. Patanjali shows us that somewhere along the way, marketers have begun underweighting the similarities among people. These may be more important and powerful from a marketing perspective. People have common ambitions, fears, beliefs, and concerns. Brands that understand and cater to those are able to dominate. We can build more powerful brands through aggregation rather than segregation. Maybe it’s time to drop the key word driven thinking and shun the world of mission, vision, values, and equity. Instead, Patanjali suggests it is better to focus on: (a) making a coherent product market selection, (b) identifying the basis for competition, and (c) relating these two to the income statement of a branded business.
The authors are Piyush Kumar, Associate Professor of Marketing at the University of Georgia, USA. & Deepak Gandotra, Marketing Manager at Flipkart. Views expressed are personal.