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Ashish Rukhaiyar, The Hindu\n<\/i><\/p>\n
Ashish Rukhaiyar, The Hindu
\n<\/i><\/p>\n
Mumbai, 5 April 2016<\/i><\/p>\n
![\"\"](\"..\/images\/patanjali-zero-discount.jpg\")
At\na time when both retailers and consumers are hooked to huge discounts\non products across categories, one company has braved the ‘zero\ndiscount’ strategy, and is stil giving its competitors sleepless\nnights. Consumers are not complaining either.
Patanjali Ayurved,\nwhich is growing at a pace that is unnerving domestic and Multinational\nplayers in the fast-moving consumer goods (FMCG) segment alike, has\nbarred its sellers from offering a single paisa of discount on its\nproducts. In other words, retailers have to sell every Patanjali\nproduct at the maximum retail price (MRP) printed on the packaging.
So\nserious is the company about this strategy, that even modern players\nlike Big Bazaar and D-Mart, which have built their business on the\ndiscounting model, have been barred from offering any discount on\nPatanjali products.
Labels like ‘Patanjali products are sold on\nMRP’ greet shoppers at such stores, which have been able to gain market\nshare by offering discounts on various products. For instance, D-Mart\nhas a system of offering at least two per cent discount on the MRP of\nall products but Patanjali is an exception.
Aditya Pittie, chief\nexecutive officer of Pittie Group, the pan-India modern trade\ndistributor for Patanjali products, says the directive has come\ndirectly from the company. For good measure, he says, it has reason to\ndo so. “Patanjali products are anyway cheaper than others in almost all\nsegments. As such, there is no need to give a discount. The quality of\nproducts makes them sell.”
Indeed, in almost all segments,\nincluding fruit juices, soaps, noodles, toothpastes and shampoos,\nPatanjali products are cheaper than those of other FMCG majors like\nHUL, Nestle and Colgate.
Sales do not, of course, always ride on\ndiscounts and companies can adopt strategies they deem fit to position\nthemselves. “Every brand has to decide the boundaries within which it\nhas to operate, including the positioning and pricing at which it wants\nto be sold,” says Devendra Chawla, president, brands, food & FMCG,\nFuture Group. “The discount strategy is also decided by brands, and\ntrade partners have to respect it.”
Devangshu\nDutta, chief executive of Third Eyesight, a strategy and marketing\nconsultant firm, saysthat every business has to look at brands from the\npoint of view of positioning, customer loyalty, price premium, and the\nadditional benefits it brings to the business, He says, “Patanjali may\nnot be offering discounts, but business is growing with no sign of\ndiminishing demand. The push has been such that there is a lot of brand\nloyalty. While the perception is that Patanjali products are cheaper,\nthe argument does not hold true for all segments.”<\/span>
The strategy does seem to be working in Patanjali’s favour.
It\nclocked a provisional turnover of Rs 3,266.97 crore in the first 10\nmonths of the financial year 2015-16 (FY16), according to a rating\nrationale document by Brickwork Ratings, a credit rating agency. This\nis more than double of Rs 1,587.51 crore reported in the corresponding\nperiod of the previous financial year.
While Patanjali’s\nturnover and profit is currently less than that of most FMCG majors, it\nis growing at a much faster pace. On the profitability front, the\ncompany, which has yoga guru Baba Ramdev as its brand ambassador,\nalmost doubled its profit in FY15 to Rs 308.79 crore from Rs 154.70\ncrore in FY14, according to Brickwork Ratings. Clearly, enough\nconsumers see value in the company’s products.<\/p>\n