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org (ISSN-2349-5162)

PRICING STRATEGY OF FMCG COMPANY:

With special reference to Patanjali Ayurved Limited

Madhuri Yadav*
Dr. Anjani Kumar**

Research Scholar- C.M.P. Degree College (University of Allahabad)*

Assistant Professor- C.M.P. Degree College (University of Allahabad) **

Abstract

Fast moving consumer good (FMCG) is the fourth largest sector in Indian economy. There are many entrants
come from national and international market in this sector. Patanjali Ayurved Limited (PAL) is one of the
fastest growing Ayurved based FMCG Company established in 2006. Marketing strategy, consumer
behaviour, place, price, promotion, product, etc are some of the factors that affect growth of any business.
FMCG sector major players in India are; Hindustan Unilever Limited(HUL), Indian Tobacco Company(ITC),
Procter & Gamble(P&G), Dabur India ltd, Colgate-Palmolive India, Patanjali Ayurved Limited, Coca Cola,
PepsiCo Inc., Nestle, Britannia India Limited. The study is based on secondary data. The aim of the study is to
evaluate the pricing strategy used by the PAL and comparative price analysis of Patanjali products with Dabur
India limited; as both are, Ayurved based company. Patanjali Ayurved Limited follows various pricing
policies and strategy in their marketing strategy. Discount differential pricing, uniform delivered price policy,
even pricing policy, offers and discounts, penetrating pricing strategy are some of the policies and strategies
adopted by PAL and Patanjali product prices are lower as compared to Dabur products.

Keywords: FMCG, Patanjali Ayurved Limited, Pricing strategy

Introduction:

Patanjali is the rising name in the FMCG sector; Patanjali began as a small pharmacy in Haridwar in 1997 and
became a company in 2006 to produce a diverse range of Ayurvedic products such as home care, grocery,
personal care, food and beverage products through company-owned outlets.1 It has also positioned itself as a
Swadeshi brand, which appeals to a specific consumer group. Patanjali entry into FMCG has placed existing
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players in all categories on the high alert. The success of the India’s fastest growing FMCG Company
Patanjali also depends on the marketing strategy adopted by it.2 Consumer buying behaviour depends on
various factors such as place, price, product, promotion, psychological factors.3 This marketing mix used by
company in proper way make a company from zero to billion.4 Marketing Strategy is the process of using the
marketing mix to attract and satisfy consumers to make a profit for the organization. 5 Various types of
strategies are there – product line and product mix strategy, Channels of Distribution strategy, pricing
strategy, Sales promotion strategy. 6 Focus of the study is Pricing Strategy and policies adopted by Patanjali
Ayurved limited (PAL) and comparative price analysis of Patanjali with Dabur since both are Ayurveda based
company.

An Overview of Indian FMCG Sector

The Fast Moving Consumer Goods (FMCGs) sector is the fourth largest sector in Indian economy. Food
product is the leading segment accounting more than 53% in this sector. Personal care 20% and fabric care
10% come next in term of market share. The major players in FMCG sector in India are; Hindustan Unilever
Limited(HUL), Indian Tobacco Company(ITC), Procter & Gamble(P&G), Dabur India ltd, Colgate-Palmolive
India, Patanjali Ayurved Limited, Coca Cola, PepsiCo Inc., Nestle, Britannia India Ltd.7

Source: https://www.ibef.org/industry/fmcg

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Patanjali Ayurved Limited

Patanjali Ayurved Limited is a FMCG company established in year 2006 by Baba Ramdev along with
Acharya Balkrishna; headquartered in Haridwar (Uttarakhand) India.8 Patanjali deals in various product
categories such as Natural Food products, Ayurvedic Medicines, Personal care products, Natural health care
products, Home care, Patanjali publications, etc. Patanjali sells products that are herbo-mineral and ayurvedic
based. At present Patanjali deals in 1000+ products. Patanjali is present in India as well as in global markets in
various foreign countries.9 Patanjali Ayurved Limited (PAL) entered into the most competitive segment of
FMCG industry. There are many competing firms dealing in same category such as, ITC, HUL, P&G, Dabur,
etc. 10

Source:https://www.google.com/search?q=patanjali&source=lnms&tbm=isch&sa=X&ved=2ahUKEwifi7jgkI
P4AhUo63MBHUUbAboQ_AUoBHoECAMQBg&biw=1366&bih=657&dpr=1#imgrc=D41_tbMyc46xhM
&imgdii=rc-qda8YP_WWVM

Objectives:

 To study the pricing strategies and policies adopted by PAL.

 To study price comparison of Patanjali Ayurved Limited product with Dabur India Limited products.

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Marketing Strategy:
Marketing strategy of an organisation describes how the firm will fulfill the needs and wants of its customers.
It can also include activities associated with maintain relationship with other stakeholders. Marketing Strategy
is a plan of action how the organisation will use its strength and capabilities. It includes primary and
secondary target market, branding strategy, product strategy, pricing strategy of product, distribution system,
promotion strategy, etc. in this paper focus is on pricing strategy and policies adopted by Patanjali Ayurved
Limited.

Pricing policies of Patanjali Ayurved Limited:

Pricing play a vital role in marketing decisions of any company or firm in the same way pricing policies and
strategies has an important role in the pricing decision of goods and services. Pricing policies and strategies
made considering company’s objective, customers need, rivals in the market and product in product life
cycle.11 Patanjali uses mix of various pricing policies.

1. Uniform Delivered Price Policy:

Uniform delivered price policy also known as FOR destination price policy. In this policy, company
absorbs full transportation cost and transportation cost in included in the product price. As the name
depicts uniform price charged from each customer irrespective of location or distance where they
live.12 The customer in any part of country will pay the same price for similar product. Patanjali follow
Uniform delivered price policy. As Patanjali, products are available online at their website
www.patanjaliayurved.net that is same for all customers in whole country.

Fig.1 Price of Patanjali products online

Source: https://www.patanjaliayurved.net/category/natural-health-care/1

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2. Price differential policy:

Price differential policy is useful in providing incentives to customers, to capture market and to
achieve financial objective of the firm/company.13 Patanjali follow discount differential pricing,
various attractive offers and discounts provided to the customers.14 The reduction in the quoted price is
advantageous to the customers, as they need to pay fewer amounts from the quoted price.15 We can see
this clear from the figure below e.g. Patanjali natural water quoted price is Rs. 60 but after discount, it
is of Rs. 40.16

Fig.2 Offers-Discount on various products

Source: https://www.patanjaliayurved.net/offers

3. Psychological Pricing Policy:

Psychological pricing policies have an emotional appeal for the customers. In this, price seems to be
lower than it actually is. Patanjali follow even pricing policy. It is clear from the picture given below
that company is using even pricing, as there is no round of number. 17 Price of Patanjali apple vinegar
is Rs 130 not Rs.130.5, 130 is even and 130.5 are odd.18

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Fig.3 Even pricing policy example

Source: https://www.patanjaliayurved.net/offers

Patanjali Pricing Strategy:

Indian FMCG industry is highly competitive and saturated for new entrants. PAL adopted penetrative pricing
strategy, as there is very high competition in the market to capture market. Penetration pricing means setting
price low initially to capture market share and let be famous with word of mouth and after that increasing
price later on.19 PAL follow penetrative pricing strategy because ingredients are natural and domestic, the cost
of the product is lesser too.20

Penetrating Pricing:

Penetrating Pricing (Low Pricing) strategy generally used in following conditions:

 When there is intense competition in the market for the product.

 When there is possibility, that product used by the public for daily use.
 When a substantial economy of scale is achieved and wide manufacturing and distribution is carried out.21

Penetrative pricing strategy has many advantages on demand side, it invokes customers to buy product at low
price, attracts potential buyers and it leads to publicity through word of mouth (WOM) marketing. On supply
side, it leads to economies of scale by large production hence greater cost efficiency and motivation on side of
retailers and distributors through large turnover.22

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Patanjali Ayurved Limited deals into various segments hence the pricing Strategy of Patanjali is determined
by the competition in the segment. Patanjali noodles compete with Maggi, honey with Dabur honey,
toothpaste with colgate, Chyawanprash with Dabur cornflakes with Kellogs, etc. Thus, the prices of Patanjali
Ayurved Limited products acquired from segmentation, geography and competition.23

Keeping in mind Company’s objectives, customers, and stage of the product in Product Life Cycle pricing
policies and strategies are framed. The Yoga Guru Baba Ramdev uses marketing mix of marketing Savvy and
smart pricing. The pricing varies with product to product, some are priced premium (Example: Ghee) and on
other categories the product are cheaper compared to competing brand in the market. 24

Baba Ramdev one motivation behind Patanjali is ‘Upkar’ (Favor and help) not ‘Vyapar’ (Business). PAL
objective to provide quality products to the customers at low prices.25

Patanjali provides offers and discounts on various competitive products to attract more people to buy at low
cost. Company uses farm to plate method for raw material. It means no intermediaries are involved and raw
materials acquired directly from farmers and delivered to manufacturing unit. After from production unit
goods are directly transferred to the outlets of Patanjali through its own vehicles. Therefore, elimination of
intermediaries reduces cost of production hence lower price of product to the customer.26

Patanjali Ayurved Limited focusing on providing healthier and natural choice to its target market
(demographic); category, region, competitive pricing are the factors that affects the pricing of Patanjali
product. Natural product are available at lower cost through contract farming with nearby farmers hence,
products cost is lower in comparison to international brands.27

Low Pricing and Cost dynamics:

Patanjali is good quality at disruptive pricing. Most Patanjali product prices are on average 10 to 30% lower
than that of competitors. This gives them a massive edge, especially in a price-conscious market such as
India28.

In a media interview, Balkrishna said that; “We buy raw material directly from farmers and we work on a
single channel right from the farmer to the end consumer and that is the real reason why our quality and costs
are under control”29

The company’s contract farming, sales and distribution methods help it to keep its costs low30. Other factors
that contribute to Patanjali’s competitive pricing include lower overheads, lower distribution margins, lower
advertising, and promotional spending. A large proportion of the India population, especially the middle class,
is extremely price-sensitive and looks for quality products at a reasonable price. Patanjali offer products at
lower price as compared to other FMCG companies.

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Comparison of Prices of Patanjali Ayurved Limited product with Dabur products

Table No. 1

S.N. CATEGORIES QUANTITY PATANJALI DABUR Percentage

OF PRODUCT AYURVED INDIA difference in
LIMITED LIMITED Price
PRODUCT PRODUCT
PRICE PRICE

1 Mixed Fruit Juice 1 Litre 9531 11032 15.78%

2 Gulabjal 120 ml 3533 4534 28.57%

3 Amla Juice 1 Litre 14035 23536 67.85%

4 Shampoo 200 ml 8537 12038 35%

5 Hair oil 200 ml 8539 9540 11.76%

6 Cow Ghee 1 Litre 59041 61042 3.38%

7 Tulsi Drop 30 ml 15043 19544 30%

8 Honey 500 gm 18045 19946 10.55%

9 Chyawanprash 500 gm 14547 21048 44.82%

10 Coconut Oil 500 ml 19049 22050 15.78%

Average Percentage difference in Price= Total percentage difference in price/Total number

= (15.78+28.57+67.85+35+11.76+3.38+30+10.55+44.82+15.78)/10= 26.349%

From the above table we can see that Prices of patanjali products are lower as compared to the products of
dabur.

Findings:

Pricing policy and strategy plays vital role in success and downfall of any business. Companies goes through
various research before adopting any pricing policy and strategy method. As there is immense competiton in

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the FMCG industry, any firm/company before entering into the market it under goes indepth study and
research.

From the above work it is seen that Patanjali products prices are less as compared to Dabur india Limited. I
have made comparitive study of Patanjali and Dabur as both are ayurvedic company. Ten products prices have
been taken from patanjali and dabur of similar weight, quantity and same products. It is clearly seen from
table Patanjali all products are cheaper than dabur.

Conclusion:

Pricing policy and strategy plays vital role in success and downfall of any business. Companies goes through
various research before adopting any pricing policy and strategy method. As there is immense competiton in
the FMCG industry, any firm/company before entering into it under goes indepth study and research.

Conclusion drawn from the above study is that Patanjali Ayurved Limited follows various pricing policies and
strategy in their marketing strategy. Discount differential pricing, uniform delivered price policy, even pricing
policy, offers and discounts, penetrative pricing strategy are some of the policies and strategies adopted by
PAL as there is very huge competition in the market. In the Table, no.1 mentioned above Comparison of
Prices of Patanjali Ayurved Limited product with Dabur products prices, in which we see a vast difference in
price of both. On an average Patanjali product, prices are 26.349 % lower than Dabur product prices. Patanjali
products are cheaper as compared to Dabur. Middle class family prefers low price products as compared to
products whose prices are high.

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41
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42
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45
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46
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47
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gm/dp/B01HT98O1Q/ref=sr_1_5?crid=3K4DTZIYT87XK&keywords=patanjali+chyawanprash+500+gram&
qid=1648001563&sprefix=patanjali+chyawanprash+500+gram%2Caps%2C425&sr=8-5
48
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extra/dp/B09PBCK7LX?ref_=ast_sto_dp&th=1&psc=1
49
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50
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500ml/dp/B013SMJ0D4/ref=sr_1_4?crid=2L8V632RSKVTX&keywords=dabur+coconut+oil&qid=1648001
926&s=hpc&sprefix=dabur+coconut+oil%2Chpc%2C511&sr=1-4

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