The case intends to introduce the reader to a disruption in the Indian FMCG industry. A single new entrant, Patanjali entered the FMCG industry in 2006, combating incumbents and attacking them on all fronts. Within a short span of time, it was able to produce results and exceed industry expectations.
The case starts with the evolution story of Dabur, the world’s largest Ayurvedic and natural healthcare company. It indicates the major milestones of the company and how it has been able to combat all sorts of threats but retain the top spot in many of the segments it operates in, over the years.
The case then discusses a potential threat to Dabur from the new entrant, Patanjali. Building on its Ayurveda brand, Patanjali launched a foray of FMCG products and, drastically reduced prices. Using the power of a Yoga guru that made the product so widely accepted among the Indian masses, Patanjali is threatening every FMCG giant in the country. The case then goes on to depict how Patanjali seems to have gone on a direct frontal attack against all existing big players.
The case is written from the perspective of Dabur to understand the nature of competition it faces from Patanjali
The main objective of the case is to illustrate that the optimal response of an incumbent could be one that benefits both the entrant and the incumbent. Choosing when and how to deter an entrant can ensure that one reaps positive profits without getting into a price war.
In addition to demonstrating various factors that affect demand for a product and how an entrant changes demand faced by a competitor, the case also provides a great setting to demonstrate how to model and analyze a strategic interaction using game theoretic tools.