Patanjali Ayurved Ltd. (PAL) is an FMCG company established in 2006 by Acharya Balkrishna and Baba Ramdev.

Question

Case Study Patanjali Ayurved Ltd. (PAL) is an FMCG company established in 2006 by Acharya Balkrishna and Baba Ramdev. It is located in the industrial region of Haridwar. It was started with the objective of promoting the ancient science of Ayurveda in coordination with the latest . technology. It manufactures mineral and herbal products and offer healthcare solutions. They started as a small company, but their revenue kept growing from 163 crores in 2009-10 to 5000 crores in 2015-16 and they are targeting for 10000 crores in 2016-17. 

They manufacture products using Ayurveda and natural components. Their products are cheaper than alternatives in the market due to low production and marketing costs. They have over 4700 retail oudets and do a lot of online selling. They are also planning to open outlets at railway stations and airports. They are now tying up with various other retail chain stores like Future group retails, Modem trade stores, Reliance retail, Hypercity and Star Bazaar. With reference to the above : 

(a) Name and discuss the pricing strategy used Patanjali Ayurved Ltd. (PAL). Why has this strategy been successful ?

(b) PAL’s target is to double their sales in the current financial year. How do they plan to achieve this ? 

(c) PAL has not been using sales promotion techniques to increase their sales. Discuss any five such techniques that you feel would help the company to achieve its sales target.

Answer 1

(a) Patanjali Ayurved Ltd. (PAL) used Penetrating icing Strategy. In this strategy, they set low price in the initial stage so as to make the brai d quickly popular and to maximise the market share. Many firms used this strategy while launching fast moving consumer products. The policy results in high sales volume during the initial stages of a product’s life cycle. This strategy is successful because in initial stage product is sell at low price to capture the market trend and catch the customers attention. 

(b) PAL’s target is to double their sales in the current financial year because they manufacture Ayurvedic and natural product at cheaper rates. They sell their products online to promote their products and tie up with the various retail chain stores like Future group retails, Modern trade stores, Reliance retail etc. 

(c) Sales promotion techniques are used to increase their sales. These are as follows : 

1. Distribution of samples : Under this method, free samples of products are distributed. Consumers use these samples and they purchase it regularly, if it gives them satisfaction. This method is generally used for products of daily use like tea, soap, detergents, toothpaste etc. 

2. ‘Money of coupons : It is a kind of certificate telling that the product mentioned there can be obtained at a specified discount. Possession of a coupon motivates the consumers to buy that product. 

3. Premium or bonus offer: A premium offer is the offer of an article free of cost on the purchase of a specified quantity of a product. For example, one bathing soap may be given free on purchase of two bathing soaps. 

4. Prize contests : The manufacturer of a product organises a contest among the retailers by which the retailers who cross the targeted sales are given an opportunity to take part in a contest which has prizes like Malaysia tours. 

5. Money refund: In this case, the seller refunds a part of price paid by the customer on the production of some proof of purchase. For example, a producer may offer to refund f 10 on sending the cash memo or wrapper of the product.