07 Feb 2018 19:53 IST

First Runner-up

From ‘disrupted’ to disruptor

Ayush should focus on providing a more premium brand offering, plugging a gap in the market

 

 

According to secondary sources, naturals formed 41 per cent of the personal care product segment as of November 2016. The same report says that the difference in the potential for growth between companies offering natural products as their core (like Patanjali) and those that don’t (like HUL) stands at 2-2.5 per cent, which can be bridged.

How to be the disruptor?

 

The above model suggests that companies move in on the market needs that are left unmet by the incumbent as the latter moves up the value chain, leaving the low end of the market up for grabs. This appears to be the case with Patanjali as well.

In order to be a disruptor, Lever Ayush should move in on the premium segment of the market for natural products, capturing the segment Patanjali has not zoomed in on yet, as is evident from the latter’s pricing, packaging, promotions and channel strategies.

The gaps in Patanjali’s current strategy are:

~ Difficulty in maintaining a competitive edge based solely on price while planning to scale up

~ Over-dependence on the brand image of Baba Ramdev.

~ Inability to build a premium brand with the current positioning and a lack of distribution channels as well as instances of stock-outs that drive down sales volumes

This is all happening in the background of certain developments:

~ Kapiva, Baidyanath Group’s premium brand, is eyeing a growth of 20-25 per cent in 2018

~ In the last couple of years, brands such as Estee Lauder have increased their stake in premium home-grown brands in the naturals segment — for example, Forest Essentials.

~ International luxury giant Louis Vuitton is considering investing $500 million in Patanjali, which might help the latter move up from the low-end segment.

Strategising to be the disruptor

According to a Nielsen Report titled But Naturally! , the benefits provided by personal care products in the naturals segment and their percentage contribution can be categorised as:

~ Addressing a problem (21 per cent)

~ Enhancement (39 per cent)

~ Maintenance (40 per cent)

Among these, brands offering products that address a specific problem are growing at twice the rate of the naturals segment. The report also studies the fastest-growing channels for the naturals segment. Based on the study, to leverage its position in this space, Ayush should:

~ Maintain a product portfolio that focuses on all the categories, with special emphasis on remedies for problems.

~ With gradual premiumisation of the brand, Ayush should look at independent stores and select high-end outlets.

~ The low-end range should be available at regular chemist’s shops,and focus primarily on the remedy category — for example anti-dandruff.

~ Treatment centres of the Arya Vaidya Pharmacy should use Ayush products in their treatment regimen, adding to its authenticity.

~ The products should always be available at major retail chains and online stores to allow people to have access to premium range products.

~ Premiumisation will also allow Ayush to enter the international market, where natural products are often associated with being premium.

Sending the right message

The success of Patanjali, thanks to its ‘ayurveda’-centric channels, and the toll on the Ayush brand for not having publicised its association with Arya Vaidya Pharmacy (AVP) conveys two things about what drives the adoption of a brand in the naturals segment — authenticity and traditional goodness.

So, the most appropriate promotion channels and their rationale are:

~ Television: This allows for a broad communication of the positioning and ‘Indianness’ of the brand. This could be used to showcase how the products are developed and produced.

~ Magazines: Choosing magazines helps maintain both a premium feel and make the products aspirational.

~ Social media influencers and tutorials or Q&A forums with experts: These add to the authenticity of the products and provide control over the brand image

~ Promotional collaboration with AVP: Allow customers to visit an ayurveda specialist for free at an Ayush store or an AVP Treatment Centre after purchasing a certain value of products.

The advertising message could be something like:

We bring to you the science behind the age-old enigma that is ayurveda. Join us as we collaborate with the best minds to bring to you the choicest of products made with the ingredients from your grandmother’s cabinet and our extra special care.

Ayush - Age-old quality for the modern you

This message should be backed by Ayush’s product development process in association with AVP and its use in wellness and treatment centres to maintain the premium, aspirational aspect and authenticity.

(The first runners-up are fourth-year students pursuing their Integrated Programme in Management at IIM Indore.)

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