sip tea (launching of a product)

Corporate Profile

Corporate Profile

To become one of the leading tea companies operating in Pakistan and Asia (future goal); it is our philosophy to reward our customers with products at outstanding value with uncompromising quality.Our product offering includes black tea; mainly from Indonesia, Vietnam, China and other parts of Asian Countries. Other business interest includes softcommodity trading, e.g. coffee, spices, oil-seed and pepper.

Our core business activities include tea blending, packing of consumer packs, design of tea flavorings and bulk tea supply.

Our close working relation and involvement in the process of tea growing has provided us an advantage that is much sought after by our competition. Freshness and Quality is going to be our key to success and is a reputation that we are proud of.

MARKETING PROBLEM

The marketing problem for Pearl Tea company is to: -

How do consumer perceives other brands available in the market

The main points in the research are:

The tea buying factor-consumer insight, taste, etc

Price sensitivity

Old brand, young brand

Who is buying, who is thinking

Switchers, retainers, loyal- what do we call our consumers

RESEARCH PROBLEM

The research problem of Pearl Tea company is to: -

What Sip Tea can offer or provide that others do not offer or provide

RESEARCH DESIGN:

The research design we are pursuing will deal with Conclusive Research and since consumer perception is a behavioral quality we will go for descriptive research in the research design. The research will help us evaluate the alternate solutions that the consumer perception results bear for us and ultimately help in formulating a clear direction for the marketing plan of Sip Tea.

The tools that we will use will mainly be interviews (All tea drinkers) and questionnaires to help us measure consumer perceptions and attitudes towards the different brands of tea available in the market.

SAMPLING METHOD:

Element:

Tea preference/perception of consumers.

Sampling Unit: All tea drinkers (single stage sampling)

Sampling Frame: All tea drinkers since there are no distinct Sampling Units.

Sample Size: 100 individualsSAMPLING PROCEDURE:

Our sampling procedure will be NON-PROBABILITY based on JUDGEMENT and CONVENIENCE in order to choose our elements for research.

The Convenience element deals with the accessibility of areas with respect to the available resources at hand. Therefore we will be covering selected areas like Clifton, Defense, Gulshan, Nazimabad, and S.M.C.H.S when distributing questionnaires.

The element of Judgment comes because of the fact that we are only looking for people who drinks tea and every one else are not considered. Because the people we want to survey are all tea drinkers and hence it would be a waste to approach people who do not drink tea and drink other beverages.

DATA COLLECTION METHOD AND TOOLS

Data collection tools that we will use in our research will be interviews (with people related to tea industries) and questionnaires. So our primary research will basically be a resultant of the information gathered from the above-mentioned tools. Our primary research will aim at gaining first hand information about the consumer attitudes towards various brands available in the market.

As part of our secondary research, we also intend to search the Internet, marketing books, case studies and newspaper articles in order to find more information about the tea industries and its current activities etc.

QUESTIONNAIRES

We had designed questionnaires with the help of which we conducted surveys among our selected sample space. The questionnaire mainly focuses on our research issue and contains questions that guide us about consumer preference and perception of Tea.

The questionnaire that we have designed to help us in our research is as follows:

1. Do you drink Tea?

Yes

No

2. Which brand you are currently using?

Tapal

Lipton

Supreme

Open bag tea

Any other brand

3. Do you use any other brand beside the brand chosen in Question# 2?

Yes Please specify the brand.

No

4. If yes in Question# 3, then how frequently do you switch your tea?

Monthly

Quarterly

Semi annually

Annually

Others

5. What are the factors that you look for before buying?

Strong taste

Strong smell / Aroma

Freshness

Color

Product name

Price

Any other thing

6. Who makes purchase decision in your house?

Childrens

Females

Males

7. Who purchases tea in your house?

Childrens

Females

Males

8. How many cups does your family consume?

1 cup2 cup3 cup4 cupmore

Children------ ------ ------ ------ ------ Elders ------ ------ ------ ------ ------

9. When do you have tea?

Breakfast

Lunch

Evening

After Dinner

10. Where do you live in Karachi?

Clifton

Defence

Shahra-e-Faisal

Gulshan-e-Iqbal

Nazimabad

Other (Please specify) __________________________________11. What is your gender?

Male

Female

12. What is your age?

Under 18 years

18 25 years

25 30 years

30 40 years

Above 40 years

13. What is your household income?

Below Rs 10,000/-

Rs 10,000/- to Rs 20,000/-

Rs 20,000/- to Rs 30,000/-

Above Rs 30,000/-

SIGNIFICANCE AND RESTRAINTS OF THE STUDY

Today the market of tea is highly competitive and it is growing with the demand and more new entries in this industry are taking place. Tea is used by all consumers from 13 and above age.

Since the problem is already defined, the study will deal with Conclusive research mostly. Also the sample group that the study will also be small in size and will deal with the consumers in Karachi only and that too in selected areas because a nation wide first hand study would be very difficult to conduct at this level with our limited resources.

CONCLUSION

From our research we have concluded that:

1. In most of the areas of Karachi, Tapal has a higher market share then Lipton and other form of teas.

2. The reason for having a higher market share is consumer preferences towards strong taste (21.9), freshness (21.9), price (24.6) and brand name (24.6) which is provided by Tapal and Lipton lacks in it.

3. Most of the time decision is made by males (65.2) and then by females (26.1). but we should not forget about children who also contribute to decision making (8.7)

4. Tea is purchased by females (51.7) most of the time and then by males (48.3)

5. It is very interesting to know that every member of the family consumes tea irrespective of age. Childrens consume 1 cup daily in breakfast and elders consume 2 to 3 cups daily on average.

6. This industry is growing at 8% per annum.

7. Health consciousness through out the world has also increased the usage of tea and decreased the usage of other beverages such as soda.

8. We can target out product towards the strong taste, freshness and quality at economical price.

9. We should target our adds towards males and females both as they both contribute almost the same to the decision making of the brands and then purchasing of the brands.

TELE SHEET

TABULATION OF QUESTIONS

14. Do you drink Tea?

Q#1Frequency%

Yes100100%

No00%

100100%

15. Which brand you are currently using?

Q#2Frequency%

Tapal6868%

Lipton5656%

Supreme44%

Open Bag3232%

Others00%

100100%

16. Do you use any other brand beside the brand chosen in Question# 2?

Q#3Frequency%

Yes00%

No100100%

100100%

5. What are the factors that you look for before buying?

Q#5Frequency%

Strong taste8021.9%

Aroma205.5%

Freshness8021.9%

Color51.5%

Product name9024.6%

Price9024.6%

Others00%

365100%

6. Who makes purchase decision in your house?

Q#6Frequency%

Childrens108.7%

Females3026.1%

males7565.2%

115100%

7. Who purchases tea in your house?

Q#7Frequency%

Childrens00%

Females6051.7%

males5648.3%

116100%

8. How many cups does your family consume?

Q#8Frequency%

Childrens10050%

Elders10050%

200100%

9. When do you have tea?

Q#9Frequency%

Breakfast10054.7%

Lunch158.2%

Evening5027.3%

After dinner189.8%

183100%

10. Where do you live in Karachi?

Q#10Frequency%

Clifton3232%

Defence4444%

Sh-e-faisal66%

Gulshan1010%

Nazimabad77%

Others11%

100100%

11. What is your gender?

Q#11Frequency%

Male9384.5%

Female1715.5%

110100%

12. What is your age?

Q#12Frequency%

Under 18 years00%

18 25 years88%

25 30 years9090%

30 40 years11%

Above 40 years11%

100100%

13. What is your household income?

Q#13Frequency%

Below Rs 1000000%

Rs 10 K 20 K9898%

Rs 20 K 30 K00%

Above Rs 30 k22%

100100%

GAP Analysis

Pearl Limited saw the need for fresh quality and good taste as major ingredients missing in the tea market. Usually competitors claimed that their product was fresh and had good taste and aroma. Upon conducting an analysis Sip Tea found out that consumers felt that certain brands just claimed that they were quality conscious but were actually not. Seeing the potential to explore and compete with the major brands in this market Pearl Limited did a comprehensive analysis to actually identify the potentials of this need. With the tea market growing at a high rate Pearl Limited decided to bring a different product in the market which would be known as Sip Tea. Sip Tea and the management of Sip Tea saw that all this could only be achieved if they played their cards right.

Marketing Objective

Our marketing objective underlines our urge for becoming a market leader in the tea industry by providing the best quality Kenyan tea to our consumers. It is also our utmost priority to give the consumers tea at economical price. This will only be possible by maintaining the efficiency of the tea production unit by continuous research and development, having deployed latest technology, keeping in view customers needs and a flawless distribution system.

Marketing Strategy

It is our intention to attain at least 5% of the Karachi tea market share within the first year of operations. We do not propose to this by direct frontal assault on the market. We intend to undertake a test market; it is because of the possibility of being subjected to intensive grilling that we plan to keep low profile for the time being and not take on competition directly. Our financial restraints do not commit us to target large market, forcing us to settle for the niche. We believe that by keeping our margin low we can attain the desire market share. We have all the credentials to slowly and quietly make our way and join the league.

Strategic Situation

Pakistan annual tea import bill has swelled to US$220 Million (approx.Rs.12.76 Billion), a massive figure viewed in the back-drop of merge Foreign exchange reserves of US$ 5.2 Billion and matching exports of some primary commodities to compensate for the trade losses. Many may not readily believe that the annual consumption figure of tea has already touched the high mark of 100,000 tons and market sales projection are that an annual total could rise to 500,000 tons, during the next decade based on the current rate of increase.

The recent initiative taken by our tea marketing company is to popularize the local cultivation of tea in the Sindh province were, therefore widely welcomed. Next few years will show how the local production of the commodity, irrespective of its quality and taste, will change the habits of the local consumers to save the foreign exchange reserves.

Bulk of the tea is imported from half a dozen countries, notably Kenya, Bangladesh, India, Nepal and some other countries but mostly in line with catering to the local taste.

Production of Tea

YearNo. of Reporting FactoriesProduction (tons)

1995-1996459,399

1996-1997560,673

1997-1998461,119

1998-1999559,277

1999-2000554,970

All tea is imported in Pakistan and there is no sign that Pakistan will be self-sufficient in producing tea in near future. This is the second largest food item to be imported after edible. The country overall expenditure is over Rs.1 billion in importing tea. Pakistan has imported 98,649 tons of tea worth Rs.9,818 Million during the year 1997-1998 as compared to US$222.9 Million in the year 1998-1999. The Government has reduced the import duty on tea from 45%-25%.

Imports of Tea

(Rs. In Million)

YearImportsPercentage Share

1990-19913,7292.2

1991-19924,3061.9

1992-19935,3862.1

1993-19945,6192.2

1994-19955,7941.8

1995-19965,7071.4

1996-19975,2181.4

1997-19989,8182.2

1998-199911,1502.4

July March

1998-19998,725-

1999-20008,299-

Purchase Pattern & Decision Makers

10% Children are Decision makers to convince parents to purchase tea.

30% Female Decision makers; 60% Female purchase tea.

75% Male Decision makers; 56% Males purchase tea.

Market growth of Tea Consumption is around 8.00%

Market Characteristics

According to the survey conducted by Pearl Limited, an average household everyday consumes 2 cups of tea and each child 1 cup. It is used as a relaxant by 78% and as a stimulant by 76%. Over all speaking 85% of the people polled have a habit of drinking tea, which includes adults both male and female. Almost everyone has it at breakfast, 50% take it in the evening, 18% have it between breakfast and lunch and 18% have it after dinner.

First of all Tea is a staple item, at least in the context of Pakistan. It is a part of everyones intake.

Secondly it is a low involvement product.

It is a convenience product. It is inexpensive, easily available and is frequently used.

Market Segment

Our prime market ranges from the middle to the upper middle income group residing in Karachi. The taste preference of this group is partially distinct from other parts of Sindh, where dust tea is preferred to leaf tea due to its strong taste. The main difference here is the acceptance of tealeaf. Tea is consumed both at home and work place. Housewives are the main purchases for domestic use.

Our Competitors and Their Analysis

We must be aware of what our competitors are up to, or if we simply follow our own marketing/ advertising strategies in a vacuum, we are unlikely to survive for long. Therefore our most important guideline while formulating our plan and strategies would be to know as follows:

Who are our competitors?

What are their products?

Who do they target upon?

What needs do they cater to?

What marketing /advertising strategies do they use?

What are their strengths and weaknesses?

On important need for answering these questions is the growing threat to tea importers by illegal smuggling of tea products. Tea trade (unbranded and open) is now facing threats from the large scale smuggling through afghan transit containers. It is available in the open market commonly called duty free, and hence it becomes impossible to compete with these smuggled quantities.

Competitive AnalysisThere exists an overlap of target market for various brands and quality of tea. Individual brand shares have fluctuated in the past largely as a result of the introduction of successful new brands and the re-launch of established brands, we are against a very large and experienced giant Lipton Yellow label and Tapal as a very entrenched member of a big league. Other established members our Kohinoor and Isphani.

Tapal is believed to be Karachi market leader. Its certainly has out sold Lipton and Supreme in respect of dust and mixture. Its success in leaf has also being quite encouraging.

Looking at this scenario we find ourselves in very trying circumstances. Endeavors to carve at our share can mean retaliation the big three have shown what they are capable of doing to competitors. The key to successful ads is consumer insight that can only be achieved if you understand your consumers through direct consumer contact market research etc. After all such handwork and labor one may actually be able to find out what they want and thereby giving it to them. That is why the market share of 'Supreme' augments when they show a family enjoying special moments over a cup of tea, and a globally acknowledged & popular brand like 'Lipton' starts losing its share in a market which just cant relate to Hadiqa and Ali Haider getting kicks out of sipping on tea. Lipton even had the idea to sniff out Tapal through its Karachi attack plan (related above), during the launch of Tapal Special but failed.

Our Future Actions

Presently, we are just targeting middle and upper middle in Karachi. We plan to move to lower class as well. Later on, if all goes well we plan to go to different regions other than Karachi, such as Lahore, Islamabad, NWFP, Punjab, etc.

At present we are manufacturing 400gms pack and 200gms pack, we hope to pack tea in different sizes as well. Packet teas are very popular in developing countries while tea bags have increasingly replaced packet teas in developed ones. Other different sizes will be sachets, pouches, cartons, tins, teabags, etc.

Flavored Tea: A well-blended herbal infusion reveals a full spectrum of flavors with high, middle and top notes. No single flavor should overwhelm the others. With practice and fair analysis of the tea consumption market, we as a company may be able to distinguish three or four flavor notes green, flowery, fruity, spicy, etc. This will be our next venture once we build our name in the black tea industry.

As we plan to cater even the lower class we will be launching whole leaf (green tea), fannings tea and dust tea.

Our Competitive Advantage

Our competitive advantage is Price. We will be targeting the market with lower price as compared to other tea brands present in the market. Apart from price we will not compromise on quality, thus in simple words:

Good Quality at Economical Price

Market Segmentation & Selection of Target Market

In the first phase of its launch the product Sip Tea is to penetrate in the Karachi market that comprises of 13,000,000 people. After doing a comprehensive research and a complete analysis of the potential market for tea the usage pattern and the presence of competitors, our company, Pearl Limited selected a target market, which has following characteristics and features.

Demographics

Age:13 years and above

Income:Rs.10,000 and above

Gender:Male and Female

People who look for ecstasy and seek relaxation from mental and physical stress.

People who are trend following, energetic and outgoing also comes in our target.

As the population distribution and usage pattern shows that this product is mainly consumed in the upper class, upper middle and middle-middle class. So Sip Tea will also penetrate in this particular segment with a different marketing program.

According to a survey Karachi has 24,000 retail outlets where different consumer items are sold. Out of these we are planning to target 7,000 8,000 retail outlets in the major areas of city where our target market lies, which are:

DistrictsAreas

District MalirMalir Cantt.

District SouthClifton, Defence and retail outlets at hotels

District WestLalazar Colony, etc.

District CentralNorth Nazimabad, some areas of Nazimabad & F.B. Area

District EastP.E.C.H.S., S.M.C.H.S., K.D.A. Scheme No.1, Bahadurabad, Mohd. Ali Society, D.M.C.H.S., Al-Hilal Society, Gulistan-e-Jauhar and Gulshan-e-Iqbal

Expected Growth for Sip Tea

The short-term plan of the company is to create awareness among the people who perceive tea being harmful for their health. In the long run company wants to go into penetration process. In the first year of its launch the company wants to achieve 5% of the total market by massive promotional and advertising activities. Consequently, we are also targeting to achieve 7% - 8% in the next year and at least 25% in the fifth year of its launch.

Description of End-User

Consumers have traditionally associated tea with refreshment, revival and relaxation of body and mind. These are the three famous Rs which are firmly linked with tea, not only as a product but also as a philosophy of living.

Tea drinking continues to constitute an important position in consumers daily consumed beverages. It appears to satisfy physiological, social and psychological levels of consumers. Consumers seek psychological benefits with payoff in terms of refreshed feeling. It kills boredom and monotony and contributes towards feeling of calmness and relaxation.

Consumers justify the consumption of tea to release fatigue and lethargy to recharge them. It is of interest to note the role of varying with different parts of the day and situations.

Morning tea serves as a wake-up signal to start of the day.

Mid-day tea serves differently for males and housewives. A man may take his cup of tea to beat the heat, kill the monotony or as a means of social interaction of his workplace. On the other hand this mid-day tea for a housewife is a payoff / reward for attending her necessary part of morning chores. She slowly sips her tea to enjoy in these private moments when she is not rushed. She would look forward for the company of her neighbor / friend to enhance her pleasurable moment.

Evening tea is related with relieving day long tension and fatigue. It brings about a light and jovial mood.

Tea serves as a sign of hospitality as it is the most desired yet affordable beverage. A good cup of tea is described as that which has the aroma and good color. One of the main concepts behind Sip Teas brand is that of taste and aroma, both known to be strongly inter-related. There is no concept of taste without the aroma. Most consumers cook their tea and leave it to simmer. It is believed that the tea liquor is left on stove to simmer; it gives out the full color and strength enhancing the aroma. Consumers do not appear to be interested in describing the tea in its dry form. They tend to focus on the end cup and end benefits.

Positioning Strategy

Positioning Statement

For the privileged tea drinkers, Sip Tea is right leaf (danedar) tea that has superior taste because it uses the best tea leaves.

Objectives for Market Target

Sales Objectives

To make our distribution process quick, smooth, fast and efficient. Meaning that our product is available at all times in the market.

Defining and outlining our distributors and retailers along with our Sales co-ordination department to achieve our proper salesmanship with our customers.

By offering special schemes, incentives and trade deals to our retailers we hope to achieve the objectives set by the marketing department.

Capturing shelf space as much as possible by proper dealer and distributor co-ordination.

Short-Term Objectives

Building brand awareness in the minds of the consumers.

By proper, effective and heavy media advertising this will eventually help us to overcome our competitors promotional efforts.

To achieve 5% market share.

Long Term Objectives

To build line acceptance.

To target other regions like Quetta, Lahore, Islamabad, etc. in the long run.

To acquire at least 25% of the market share by the year 2008.

Trying to squeeze competitors market share.

To develop and up-grade our Research & Development department, so that we can come up with better quality and more improvised products.

To achieve low-cost distribution by selling their products through independent distributors and retail stores.

To achieve low-cost production through investment in automated manufacturing activities.

(i) Product Description

The name of the product Sip Tea which means to have tea in less quantity with each sip. By this name we plan to convey a message to our customers i.e. they should Sip it at least once to see the difference by comparing our brand with other tea brands in the market. As said before that one of our competitive edge is to hit the market with the quality, so we will try to do as we have committed to our clientele.

What Does Sip Tea Contain?

Sip tea comprises of three main components: caffeine, polyphenols and essential oils (also called aromatic or volatile oils). Additional elements are introduced during Sip tea processing:

Caffeine: When caffeine was first extracted from tea, it was thought to be a different substance and was called theine. It is now known that they are one and the same. It is the caffeine in tea which gives it its reputation as a banisher of fatigue and a lifter of spirits. Caffeine stimulates the central nervous system, promotes blood circulation and stimulates the kidneys to produce more urine. All types of tea (green, oolong and black) contain about 40 mg of caffeine per serving, depending upon blend and strength of brew, which is a third to a half as much as coffee.

Polyphenols: Once incorrectly referred to as tannins, polyphenols are responsible for the color, briskness and flavor of the teas. They account for about one-third of the soluble materials in leaves, but differ in type between teas. Groups of related polyphenolic compounds are called Catechins. Green teas are high in the simple Catechins which are only lightly colored. In black teas, through fermentation, the catechins have formed into larger, more complex structures called tea flavins. Polyphenols has been the subject of recent medical research, which suggests that they may have positive health benefits in the prevention of heart disease and cancer.

Essential Oils: Essential oils contribute significantly to the fragrance of tea and somewhat to its taste. They accumulate in the leaf as it grows, and evaporates during and after manufacture. Exposed to strong heat, they will disappear completely, which is why they are also referred to as volatile oils.

Sip Teas Unique Selling Proposition

The foil-in-bag consists of a foil wrap inserted into a pouch. Although it is chosen by many of our competitors as it offers some advantages over the others. In that a wider range of packaging materials can be sourced locally rather than imported and the inner pack is hermetically sealed; this has been kept in mind with the view to maintain the products freshness and taste at all times. The cost is reasonable the pack is crushed proof and secondary packaging can be straight forward.

Marketing Program Positioning Strategy

(i) Perception of Customer About Our Product

Pearl Limited plans to create a perfect brand image for our product in the minds of the consumer. Pearl will be taking the idea of Gladstone, the Victorian Prime Minister (1865) and what his views were about tea:

If you are cold; tea will warm you

If you are too heated; it will cool you

If you are depressed; it will cheer you

If you are excited it will calm you.

Demographics

The demographic environment mainly provides a brand structure for our company to place our product. In other words, it greatly facilitates in the market positively for product and determining its possible competitors.

Almost all social classes consume tea; age and sex factors do not have a significant impact on tea. And it could be somewhat broadly and easily categorized. Individuals belonging to all sexes, ages varying from 12 to 70 years by and large consume tea.

Psychographics

There are people who belong to middle and upper middle-class. Modern time-conscience, busy people who want to work hard and believe in achieving their goals. Our Sip Tea will be source of satisfaction, energy and refreshment on their busy lines.

(ii) Brands Positioning

In terms of Brand positioning we have translated this by entering in to the fray through niche market. The type of market chosen by us has entry points are areas of Karachi populated by our target groups. We will try to penetrate in the targeted areas with the help of tea stalls and institutions. The market has some to accept the soft packs along with traditional hard packs. The credit for the development of the soft pack goes to Tapal; whatever may be the history the fact is that the soft pack has come to be accepted as a regular type. It has taken positive color overtime. It is economical without affecting the quality which means that there marketer are perceived to be holding the interest of the company dear to them. Hard packs on the other hand are perceived as superior and hold a large share of the market. Keeping these facts in mind and using them on our benefits.

Functional Positioning

We plan to capitalize on our main area that is through our brand we hope to relax our consumer. We want the consumer to feel that once he starts his day with Sip Tea he will actual

ly feel fresh, energetic and a totally new person! Sip Tea will be a tea brand that does wonders for its consumer.

Experimental Positioning

Apart from the fact that Sip Tea will relax and revive an individual, Sip Tea also plans to target the taste buds of its consumers.

Sip Teas Astringency FactorA live, pungent sensation on the tongue and gums. Astringency is not to be confused with bitterness, which is undesirable.

Astringency gives tea its refreshing quality. Not many people are familiar with the term Self-Drinking. This term will be applied to Sip Tea that has good quality and flavor balance, and does not need blending.

Sip Teas Positioning Concept

Sip Tea plans to position its tea brand in the following categories:

1. Sip Teas Attributes

The attributes of any product are its tangible characteristics. As far as Sip Tea is concerned it energizes, revitalizes, relaxes and refreshes a persons mind. Be it as a morning cup or late in the evening as a relaxant; Sip Tea hopes to care for its customers.

2. Sip Teas Price / Quality Complement

Sip Tea will be approaching the tea market as a cost-friendly and a quality-conscious product. Sip Tea will be offering the product at economical price and not compromising on quality standards.

3. Use or Application

Sip Tea plans to increase its product usage by adding further enhancing factors to it. Sip Tea is a combination of health and fun-drink; not only this, it also has other application factors.

Sip Tea can be used by women to soften and lighten the eye bags under their eyes.

Sip Teas used tea (after the extracts have been taken out) can also help in cleaning of household utensils that have stains on them

Sip Tea carries a lot of health benefits. The theaflavins in black tea show antioxidant properties in model laboratory studies. In a recent laboratory test conducted by Pearl Limited, the frequency of pancreatic cancer declined in relation to an increasing lifetime consumption of black tea. Sip Teas benefits for men aged 65 to 84 is that increasing intake of foods containing flavonoids - 61% from black tea, 13% from onions, and 10% from apples - was strongly linked to a lower rate of death from stroke and other coronary disease. Sip Tea will be a natural source of fluoride and will have positive effect on preventing tooth decay and gum disease; so for a consumer who are conscious of drinking tea due to this factor will revert to consumption of Sip Tea as being a User-friendly Tea.4. Product User

The end-user is Sip Teas consumer. Any individual who buys Sip Tea is our valued consumer. Sip Tea hopes to inculcate positive habit pattern in their consumers. This could be that Sip Tea changes the brand perception about the product. The image that Sip Tea hopes to kindle in a customers mind is of youthfulness, energy, happiness, refresher, etc. Thus, in the end changing the user habits of a particular consumer from the existing image that another tea brand has established in his or her mind to the one that projects:

Sip Tea - the best tea youve ever had

5. Competitors

Sip Tea is selling tea; thus, we are competing with all the players in the beverage i.e. with mineral water, carbonated drinks, fruit juices, other tea brands, milk, coffee, cola drinks, etc. Our competition is with quite a few existing and established tea brands in the market. These are Lipton and other Lipton products by Lever Brothers Pakistan Limited, Kohinoor, Ispahani, Tapal and Brooke Bond. Sip Tea hopes to position tea in a totally different perspective than that of its competitors. For e.g. the Brooke Bond, Taj Mahal advertisement has a celebrity, Zakir Hussain being portrayed as an individual and as a celebrity who can leave anything in life but Taj Mahal Tea and his tabla.

(A) Product Strategy

With success on its mind, Sip Tea is following a communications strategy that focuses on the product and the product experience. The brand advertising strategy is in three parts:

The brands heritage,

The teas taste, aroma and color, and

The emotional bonding with the consumer.

All our commercials will sign off with the line:

Sip Tea,

Sip Tea will be packaged in a way that the tea leaves will be protected and it will maintain its functional form. The tea will not loose its taste because we will be very careful about the products packaging. Sip Teas pack will not be difficult to open; consumers will be able to comprehend easily on how to open the pack. Sip Tea will create a desirable image by the color of its pack. Most consumers associate a specific color with certain feelings, such as Red is associated with fire; our pack will be mainly using colors green and yellow. The color green depicts the color of freshness and relating that tea leaves are green in color; the yellow color conveys a different message to our consumers - a message that yellow is about youthfulness, energy and happiness.

Apart from offering valued services to our customers at point-of-sale areas, we will also allow and welcome those customers who find any fault in our product. By this we will be available to our consumers at all times i.e. there will be a call centre which will handle all customer queries about our product. We want to be in direct contact with our customers and not just through our wholesalers, retailers, shop-owners, etc.

Sip Tea will not be just another tea brand or just another shelf item; it hopes to become a household name. The people at Sip Tea are there to create awareness about the product, thereby searching for consumer interest, their evaluation, trial of Sip Tea, finally leading to adoption of the product and most importantly after being satisfied and completely contented with Sip Tea he / she comes again to the store to purchase it.

Initially the product will be available in three most popular sizes. There will be 400gms pack, 200gms pack and a 10gms sachet pack. This aspect has been kept in mind so as to achieve Divisibility in relation to our brand. The Divisibility factor is very important if we want the purchase for our customers to be convenient, and that for every occasion there is a size. Manufacturing tea bags is also in the pipeline; this will happen in the near future.

Product Life Cycle

To be able to market its product properly, a firm must be aware of the product life cycle of its product. The standard product life cycle tends to have five phases: Development, Introduction, Growth, Maturity and Decline. Sip Tea is currently in the introduction stage, which is evidenced primarily by the fact that they dont have a loyal group of stable customers and thus we need to work on establishing a brand name for ourselves and cut in competitors market share.

Furthermore, cost management, product differentiation and marketing have become more important as growth slows and market share becomes the key determinant of profitability.

(B) Distribution Strategy

Sip Teas effective and efficient distribution channel provides its members with an important strategic edge over competing channels. Sip Teas distribution strategy will basically relate to the fact that how to reach to our target market. For this reason, Sip Tea, can outsource the major activity as we feel that it will be hard to distribute to 24,000 retail outlets on our own, therefore we believe to develop good ties in order to push the product in the market. To be prompt and accurate in supplying of the product to the retailer shops consistently, we have been preparing the whole wide squad for the distribution in which we emphasize our distributors to wear our product design on delivery vans which exhibit the product attributes and holds the tea name, color, design and slogan. With that we have also provided special caps to our distributors who are exclusively distributors of Sip Tea.; so as to project the image of the company and at the same time using it as a promotional tool. We do not want to be out-of0stock ever. According to a recent research conducted by Food Marketing Institute, an estimated 3% of annual sales are lost due to out-of-stocks and that retailers lose about 0.5% of their customers due to this problem.

Selecting the Distributor

This subject is as sensitive as pricing. Wrong channeling can lead to total chaos. While selecting the distribution area we at Sip Tea felt we needed to have a certain checklist to evaluate and select our distributor:

The distributor should be financially sound.

The distributor should have the necessary knowledge of distributing Sip Tea to the target market.

The distributor should have the Right Infrastructure that is, Human Resources to transport and take Sip Tea to the market, having proper storage and warehousing facilities with transportation aspect to be kept in mind.

The last and the most important factor that we had kept in mind while evaluating our distributor was that he should not have been handling any competing brand that is, Lipton, Tapal, Brooke Bond, Ispahani, etc. because then this would result in clash of interest from the consumers side between two or more brands.

Distribution Channels coffee & tea chains supermarket/hypermarket/utility stores bazaars petrol stations & convenience Outlets pharmacies other outlets food wholesalers other wholesales retailers cash & carry(c)Pricing Strategy

We have come up with three sizes initially which are 400gms pack, 200gms pack and 10gms sachet pack each. After getting an encouraging response from the target market we will go into further divisibility. Meanwhile, we believe we can penetrate into the market by introducing prices lower than other local and foreign brands in the market:

400 grams at Rs.110.00

200 grams at Rs.52.00

10 grams at Rs.3.00

This pricing level along with an effective promotion campaign will help us to achieve our goal of capturing 5 % of the market share.

Price Breakup - 400gms Pack

ParticularsPer Unit Cost (PUC)

Cost of Goods Sold41.51

Add: Excise Duty5.19

Sales Tax6.23

Ex Factory Price52.93

Add: General Admin. Exp.13.85

Distribution Exp.15

Promotion Exp.17.85

Profit Margin4.15

Selling Price to Retailer103.78

Retail Margin6.23

Selling Price110.00

Price Breakup - 200gms Pack




Sales Tax2.95



Distribution Exp.7.07

Promotion Exp.8.45

Profit Margin1.96


Retail Margin2.94

Selling Price52.00

Price Breakup - 10gms Sachet Pack




Sales Tax0.17



Distribution Exp.0.41

Promotion Exp.0.48

Profit Margin0.11


Retail Margin0.17

Selling Price3.00

Competitors Pricing Analysis

Competitor BrandsPrices for 10gmsPrices for 50gmsPrices for 100gmsPrices for 125gmsPrices for 200gmsPrices for 250gmsPrices for 400gmsPrices for 500gmsPrices for 400gms (Plastic jar)Prices for 450gms (Plastic jar)

Lipton Yellow Label Tea--Rs.30-Rs.60Rs.118--Rs.135

Richbru Chai---Rs.29-Rs.57----

A1 Kenya Mixture--Rs.24-Rs.47-----

Tapal DanedarRs.3Rs.15Rs.28-Rs.55-Rs.108-Rs.115-

Tapal Family Mixture--Rs.26-Rs.51--Rs.125-Rs.125

Supreme Tea---Rs.33-Rs.66---Rs.125

Ispahani Danedar--Rs.28-Rs.55-----

Ispahani Super Mix--Rs.26-Rs.51-----

Kohinoor-Classic Strong---Rs.34-Rs.65----

Kohinoor-Danedar----Rs.55-Rs.110---

D) Promotion Strategy

In the promotional mix the company has decided to use the following elements according to the target market and the nature of the product.

Sales Promotion

Sales promotions are those marketing activities that provide extra value or incentive to the sales force, distributors, or the ultimate consumer and can stimulate immediate sales. Sip Tea will be coordinating their integrated promotional activities with the marketing mix; this decision has been taken so as to avoid wastage of time, money and energy at all functions of the business. Sip Tea will be taking into consideration consumer oriented sales promotion, point-of-purchase displays, gifts and memorabilia, collectible items, etc.

Point-of-purchase Displays: Sip Tea will provide its product cutouts to the retailer shops to place it at their counters.

Consumer-oriented Sales Promotion: Sip Tea will give free plastic teapots on its 400gms pack and tea-cozys with 200gms pack.

Gifts and Memorabilia: Sip Tea will be giving wall clocks, calendars and a Sip Tea diary to major outlets in Karachi city.

Collectible Items: Sip Tea will be rewarding its valued consumers with collectible items such as key-chains, mugs, teaspoons, etc. all carrying Sip Tea logo for better rapport with consumers, maintenance of brand loyalty and brand recognition.

Forecasts and Budgets

We have made the following sales forecast for the year 2002 based upon which for our own internal records and references we will be making projections for the next seven years.

Sales Forecast

Total Market

:13,000,000 kgs

Targeted Market Shares (5%):650,000 kgs or 650,000,000 gms/year

Total Sales (400gms)

:650,000,000 * 0.25 = 162,500,000

Total Sales (200gms)

:650,000,000 * 0.30 = 195,000,000

Total Sales (10gms)

:650,000,000 * 0.45 = 292,500,000

Size of Package (400gms)

:162,500,000 / 400 = 406,250 units


:195,000,000 / 200 = 975,000 units


:292,500,000 / 10 = 29,250,000 units

Trade Price 400gms (in Rs):406,250 * 103.77 = 42,156,562

Trade Price 200gms (in Rs):975,000 * 49.07 = 47,843,250

Trade Price 10gms (in Rs)

:29,250,000 * 2.82 = 82,485,000

Total Sales

:42,156,562 + 47,843,250 + 82,485,000

= 172,484,812 Income Statement

Particulars2002

Sales172,484,812

Less: COGS 68,993,925

Gross Profit103,490,887

Less:

Gen Admin Expense

Distribution Expense

Promotional Expense 22,997,952

24,837,813

29,667,388

Net Profit 25,987,734

Methods for Determining the Promotional Budget

There are six important methods of determining the promotion budget:

Affordability

Percentage-of-sales

Competitive parity

Objective and task,

Profit maximization,

Ratio of elasticities.

The level of promotion at which profits reach a maximum is called the optimal level of promotion. The optimum is the point at which the input to the system gets the highest returns or output.

The method, which Sip Tea has selected to determine the promotional budget, is Affordability. In the affordability method of budget setting, a firm spends as much on promotion as it can afford. It first determines how much money is available after other expenses are paid. It then determines to spend some fraction or that entire amount on promotion.

Our mother company, Pearl Limited, is ready to take care of all the promotional expenses. We have taken the challenge of communicating, hand in hand with our people the idea behind launching of Sip Tea, which is a high quality, low-priced, health maintaining, relaxing, and energizing tea. We have been working in the tea industry, but as a Tea Brand, it is our first product, therefore the promotional budget needed to launch this product will be given by our mother company i.e. of Rs.36,000,000/- for the first three months during our product launch stage.

Scheduling Advertising

Scheduling refers to the timing of the promotion expenditures or the sequencing of promotions within a time-period. Few of them are; massing, flighting, pulsing, and even-scheduling. We have selected flighting because it involves irregular scheduling ads in bursts for short periods of time within the year, separated by long periods of time with no advertising. Flighting may also be called as bursting.

Sip Tea thinks that it is the best way for the company to schedule its advertising because through affordability method it is able to advertise the brand with irregular volumes and irregular time intervals. The second idea behind this is that we will be promoting heavily in the first three months because of the introductory phase of the product. Flighting helps us to maintain different amount of advertising in different months within a time span of a year. With the passage of the product life cycle, looking at the position of our product in the market, we can change the way we have to schedule our advertising budget.

Media Planning

Media Objective

Sip Tea will reach to its target market making them aware about the product and its brand message.

Media Strategy

Media strategy describes the course of action you plan to follow to achieve the media objectives. Our strategy would be using the four categories of media mix, which will help us to reach our target audience through all doors of the promotional mix, and easily as well. Doing this efficiently at a minimum cost will help the company to achieve its objectives.

Media SelectionTo reach the target market in a short period of time we need the vehicle that will drive us to achieve our objectives. The best suitable way of accomplishing this is through the use of the following media:

Electronic Media

Broadcast media consists of both television and radio. Electronic media provides the resources to present your communication in a creative way, thus enhancing the benefits and usage. The colors and the communication if incorporated properly, remain in the minds of the viewers. We have used it for the purpose of broad reach as well.

The idea that Sip Tea, can be best delivered to the people by the use of an effective commercial. The channels selected by us are PTV Network and PTV World both. PTV World will show the commercial in between different drama serials and programs. The commercial will run in the prime time and after News Headlines in Khabarnama and Time Spot before Khas Khas Khabrain in PTV.

Print Media

Magazines and newspapers are selected for the purpose of communicating as well. These involve the reader with the message and have a longer life as compared with electronic media. If a good quality ad with good color scheming is used it catches the eye pupil and thereby communicates a positive feedback to the brain. Jung, Dawn and The News are selected for this purpose. Weekly Mag and Womens Own magazines are also the focus of attention of the target audience we plan to serve. Selecting them as a channel to convey the communication message will also help us in getting to our goals.

Point of Purchase and Mobile Media

Point of purchase always encourages impulse buying, because through this aspect people have the capability to recall a brand and encourage brand loyalty. Right at the early stage we are using buntings and cut-outs. Mobile media is the best way to provide repeated exposure as it has got little time to get the target audiences attention but if done properly can expose Sip Tea, hence creating recognition and awareness for it. Billboards are used at places where our target market resides or passes by. This will provide us with the opportunity of mass viewer-ship.

Percentage-wise Breakup of Sip Teas Expected Viewer ship using the four vehicles of Media Selection

(A) Publications

WeekDawn-SundayJung-AkhbarJung Sunday MagazineThe NewsWeekly MagazineWomens Own

Week 1Half-Page

(2nd Page)F/Pg upto 215 cmsTitle Page ColorF/Pg upto 215 cmsB/Pg ColorCenter Spread

Week 2Qtr. Page

(Pg 1)F/Pg upto 215 cmsInside Front/Back ColorF/Pg upto 215 cmsInside Front/Back Color-

Week 3Qtr. Page

(Pg 16)F/Pg upto 215 cmsInside Front/Back ColorF/Pg upto 215 cmsB/Pg Color-

Week 4Qtr. Page

(Pg 17)F/Pg upto 215 cmsInside Front/Back ColorF/Pg upto 215 cmsInside Front/Back Color-

Week 560 Column cms (Pg 1)F/Pg upto 215 cmsB/Pg Color-B/Pg ColorCenter Spread

Week 660 Column cms (Pg 16)F/Pg upto 215 cmsB/Pg ColorF/Pg upto 215 cmsInside Front/Back Color-

Week 760 Column cms (Pg 1)F/Pg upto 215 cmsB/Pg Color-B/Pg Color-


Week 960 Column cms (Pg 1)F/Pg upto 215 cmsB/Pg Color-B/Pg ColorCenter Spread


Week 1160 Column cms (Pg 1)F/Pg upto 215 cmsB/Pg Color-B/Pg Color-


Total CostRs.3,446,100Rs.2,838,000Rs.2,921,625Rs.1,053,500Rs.449,550Rs.90,000

Total Publication Media Charges (3 Months) = Rs.10,798,775/-(B) Mobile Media and Point-of-Purchase Media

Billboards

Schon CircleRs.1,000,000/-

Sharah-e-Faisal (Kala Pul)Rs.1,000,000/-

Hasan SquareRs.1,000,000/-

Total Cost (3 Banners)Rs.3,000,000/-

Point-of-Purchase

Buntings (25,000 @ Rs. 4/-)Rs.100,000/-

Cutouts (20,000 @ Rs. 6/-)Rs.120,000/-

Total CostRs.220,000/-

Total Mobile and P.O.P. Media Costs = Rs.3,220,000/-

(C) Broadcast Network

PTV Network

WeekPTV SpotsInsertionsDurationCost/insertionTotal Cost

Week 1After News Headlines in Khabarnama730 sec.Rs.41,980Rs.293,860

Time Spot before Khas Khas Khabrain730 sec.Rs.31,485Rs.220395

Prime Time1530 sec.Rs.31,485/-Rs.472,275

Week 2After News Headlines in Khabarnama730 sec.Rs.41,980/-Rs.293,860

Time Spot before Khas Khas Khabrain730 sec.Rs.31,485/-Rs.220,395




Prime Time1530 sec.Rs.31485/-Rs.472,275




Week 5Spots before/after a specified program630 sec.Rs.20,990/-Rs.125,940




Week 7Prime Time1530 sec.Rs.31,485/-Rs.472,275



After News Headlines in Khabarnama530 sec.Rs.41,980/-Rs.209,900







Week 11Prime Time1230 sec.Rs.31,485/-Rs.377,820




PTV World

WeekPer Week InsertionsDurationSpot RateTotal Cost

Week 14230 SecondsRs.15,875/-Rs.666,750












Total CostRs.6,445,250

Contingency Plan

If our marketing strategy fails then we will again conduct the overall SWOT and GAP Analysis, followed by re-defining our corporate objectives, goals, aspirations, employee trust, etc. thereby seeing and judging where we actually failed and why.

Defining on how to handle a situation where our competitors are having a great time seeing that another player is out of the tea industry; meaning less players more market share and as such how to counter attack it. We dont need to be aggressive but surely will need to ensure to take careful and calculated steps so that we do not falter in future.

BIBLIOGRAPHY

Strategic Management by Craven; Chapter 15 Marketing Strategy Implementation and Control, Part V. References for International Marketing and Trade System Strategic Management Process by Philip Kotler Marketing Back to Basics, Lecture at American Marketing Association Case study on The Tea Cup Runneth Over, Why Less really is more by N. Michael Langenborg Searched the internet and various websites on the internet. To name a few: www.yahoo.com www.peetstea&coffee.com www.marketingmajic.com www.agencyfaqs.com www.homebusinessmag.com

Good Quality

High Price

Low Price

Sip Tea

Bad Quality

Tapal Family Mixture

Lipton

Supreme

Tapal Danedar

Lipton

Supreme

Tapal Family Mixture

Tapal Danedar

Flavor

Sip Tea

Tasteless

Aroma

Smell

Adnan Zoaib Lotia PAGE # 1

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