An Introduction Bogawantalawa Tea Marketing Essay

An Introduction Bogawantalawa Tea Marketing Essay We are one of the foremost tea exporters who manufacture a diversity of own label and private label products from the teas manufactured in own estates situated in the Golden Valley of Bogawantalawa. We control some of the premium High Grown and Low Grown Tea estates in the world manufacturing over 11 million kg per year. We present garden fresh teas at a cost efficient price and every consumer who works with us will have a exceptional occasion of dealing direct without going through middle men. In Sri Lanka Bogawantalawa is a tiny city in (Central province). It is situated at 1514 m elevation higher than sea level in the country. Located Bogawanthalawa is very well-known for its Tea estates among the country. a lot of key companies operate around the tow Majority of tea estates of the area is managed by a company called Bogawantalawa Tea Estates Ltd. Bogawantalawa Tea Estates is the largest Sri Lankan supplier. Theres a sense of mystique when talking about this valley. Known well over for 100 years, this mist enshrouded, mountain valley is known for its tea of outstanding purity and taste. Sought after by connoisseurs the world over, Bogawantalawa produce a unique blend of tea of unparalleled fragrance, flavor, aroma and sourced from this one single valley, it is meticulously handpicked, and comes to you fresh, from tea leaf to teacup. The Bogawantalawa Valley is a miracle of nature. On one side it is surrounded by one of the worlds most beautiful national parks and wilderness reserves, on the other side it is bordered by verdant mountains shrouded in mist. The ancient name of the Valley, Boghavanthalawa, literally means the plain of the gods. But it was not beauty alone that attracted the first Scottish planters to the Valley, way back in the year 1869. These first generation planters found that the extremely fertile soil and the high elevation were conducive to the production of high quality tea very high quality tea. High mountain winds and the abundant monsoonal rains induce a slower, more concentrated growth in the tea bushes. This in turn brings out a tea that is rich in its flowery bouquet and refreshing in its warm taste. 2.0 Mission Statement Bogawantalawa is a company of resourceful people who share a responsibility and commitment to attain excellence in managing the resource of the company by providing customers with high quality products. 2.1 Current market position In below chart we can identify who are the main competitors for Bogawantalawa Company and what is the current market situation of the company in Sri Lanka. High Price Low Price High Quality Low Quality Watawala Tea Cylonta Tea Lipton Tea Dilmah Tea Bogawantalawa Tea Competition Vs Price 2.2 Four Ps for Bogawantalawa Company Products Currently Bogawanthalawa Company has been mainly produced six major products. Such as Black tea, Green tea, White tea, Herbal tea, Single Estate tea, flavored tea. These products are successfully marketed in the local market and it has started to construct profits. So the company has taken a decision to enter in to a new market with their existing products. By looking at the above positioning chart we can identify Bogawanthalawa has a High quality product for medium price when compared in to the local competitors. Place The company is looking forward to move to India as their new market. So company has identified two main competitors from existing market such as TATA Tea and Hindustan Unilever Limited (HUL). Bogawantalawa Company has sold their product through their own outlets near to factory and also they have in to retail business also through supermarkets and retail shops. Price When comparing to other good brands and existing brands locally we can say that company have priced fairly for the customers. Because company have using high technology to produce the product for high quality. As an impact of using latest technology price has gone little bit up. It will be a advantage, when entering to new market to capture a potential customers company can go for a attractive pricing strategy. Promotion Tea is a product has to promote in different ways than other product. So we can use the media for give publicity first. And also we can use newspapers to give an idea what is this product and quality standards to gain customers trust. And also can have promotional campaigns in that outlets (buy two and get one free) to attract customers first into the brand. (Refer appendix 01 for more details page No 17) 2.3 SWOT analysis for Bogawantalawa Company Once the forces affecting rivalry have been recognized, the company will be in a position to identify its strengths, weakness to overcome threats and cash on the opportunities. Under the SWOT factors I have discussed about the key issues and the opportunities that company can use. (Refer appendix 01 for SWOT analysis for Bogawantalawa Company page No 17 18) 3.0 Market overview India and source of information Company has taken a decision to move in to a new market. Tea industry in India is old about 169 years. It inhabits a significant place and acting an extremely helpful part in the economy. So the company has chosen India as the potential market. Tea is an agro-based product and is subjected to vagary of nature. In the face of unfavorable agro climatic situation skilled in tea growing areas in numerous years, Indian Tea farm Industry is clever to maintain large growth in relative to quantity of Indian tea manufacture during the decade time. In India teas is a major beverage in the country. It also considered as the cheapest beverage among the beverages accessible in Indian market. The tea production  provides profitable straight employment to more workers mostly strained from the  backward and communally poor part of the community. It is also a considerable overseas replace earner and supply significant quantity of income to the country. In India tea plantations mainly situated in rural hills and diffident areas of North-eastern and Southern States. Kenya is fundamentally a CTC tea manufacturing country. While India is face to the competition from Indonesia and Sri Lanka with look upon to sell abroad of orthodox teas and from China with look upon to green tea export, it faces competition from other African countries and Kenya in exporting CTC teas. For India the foremost competitive countries in tea industry in the globe are Kenya, China, Sri Lanka, and Indonesia. Sri Lanka and Indonesia are producing largely orthod ox varieties of tea. China is the foremost producer of green tea to the market. By looking at the factors Bogawantalawa Company has decided to move in to Indian market. Appendix 02-(SWOT analysis of Tea industry in India and PEST Analysis for Indian Tea industry and source of information page No 19-22) 3.1 Special features of the Indian Tea Industry High cost due to high input cost. Low investment in Development Programme. Huge percentage old tea and Low Productivity. No main concern for Scientific Cost Management. Production dependent of agro-climatic conditions. Labour intensive. Product Life is for limited period. Same plant and same agro-practices give variations in quality in different regions. 4.0 Competitor analysis Looking at the Indian market we can identify two main competitors. Such as TATA Tea and Hindustan Unilever Limited. TATA Tea TATA Tea is the biggest perpendicularly integrated tea industry in the globe, from its  agricultural estate activity throughout to its packaging and marketing initiatives. Tata Tea Limited, also known as Tata-Tetley, is the worlds second largest producer and distributor of tea. It also involves in the farming and produce of instant tea and black tea, tea buying, and trade of tea in bulk or value added form. It offers tea mainly under the many brand names such as TATA Tea gold, TATA Tea premium, TATA Tea Agni, Tetley, Kanan Devan, and Chakra Gold. (Refer appendix 03 for SWOT analysis of TATA Tea and internal environment analysis page No 23 24) 4.1 Assumptions The company assumes to enter in to the biggest existing market in India. Because of the high quality company assume that can capture a market soon as they go to the market. Sri Lankan tea is the one of the best Tea in the world so Bogawantalawa Company is a part of it. Company is product is high quality so company assumes that their product is better than to Indian tea when comparing to the competitors. Also assume that company can capture working class of the country because mostly rich people in the country looking forward to have coffee than tea. And company assumes their pricing strategy is better than competitor. And also assume to take over a 10 to 20% market share within the five years time period. In India lot of people prefer tea so can assume demand for tea will remain as the same. 4.2 Objectives Increase the market share 15 to 20% within the five years time. Generate brand awareness within consumer target market and  business target market. Increase the quality with new technology and reduce the price than competitors. The corporation is focused on building value around its  brands to differentiate it from competitors. Improve the distribution through best known established dealers, retailers. Create a publicity operation to build brand consciousness and distinguish products superiority from competitors through emphasizing trade-sales advertising to support delivery approach. Build a long-lasting affiliation with the  buyer and is powerfully positioned in its exacting segment. To improve market share by 4% in the each year. Market share as % 1st year 2nd year 3rd year 4th year 5th year Total Market share Every year by 4% 4% 4% 4% 4% 4% 20% 5.0 Ansoffs Matrix for Bogawantalawa Tea Current Product New Product Current Market Market Penetration- Relationship marketing, industries cafeteria, retail stores, supermarkets. Product Development   Re branded, re packaged products, new flavors, and new varieties. New Market Market Development   Open outlets all over the country, New resellers, new delivery channel, online selling, make popular the brand and the logo. Diversification- Partnership activities, campaigns and knowledge exhibitions and workshops. 5.1 Marketing strategies For product development Pull strategy. Brand awareness. Heavy advertisements. To gain bargaining power of suppler. Pricing strategy Premium pricing strategy. Skim price in Order to gain the cream from the top of the demand curve. High price shall be changed, with a 30% increase as compared to the leading competitor. Product marketing strategies Massive campaigning using the concept of pull strategy. Allocation of advertisement budget at 5% A product focusing on the high class at a high price, thus a creating a niche market segment. Co branding through installation of finlays tea machine at different places in corporate sector or other business. Media campaigning regarding decaffeinated. Free samplings. Slowly but surely open outlets in other parts in the country. (Refer appendix 04 for more details on marketing strategies page No 25) 5.2 Target market Daily tea drinkers Offices (government and privet sector) Retail shops, resellers and supermarkets Restaurants, hotels and guesthouses Target market Portfolio Matrix for Bogawantalawa tea High High Business strengths Industry/ Market Attractiveness Low Low Hotels, Restaurants Daily tea drinkers Retail shops Supermarkets Offices 6.0 Porters Five Forces Industry rivalry à ¢Ã¢â‚¬  Ã¢â‚¬Ëœ [High] Low switching costs. There are approximately700 tea companies in India hence there is intense rivalry amongst them. Market is dominated by a large number of unorganized players. Industry growth is slow. Bargaining Power of Buyers à ¢Ã¢â‚¬  Ã¢â‚¬Ëœ [High] Not much product demarcation in terms of taste also low switching cost. There are a large numbers of buyers purchasing the manufactured goods. Buyers purchase a huge quantity of the industrys total production. The bargaining power of buyers is extremely high as the buyers have numerous options on hand. Bargaining power of suppliers à ¢Ã¢â‚¬  Ã¢â‚¬Å" [Low] There are substitute like coffee available. Suppliers product creates low switching cost. There are a large number of produces of tea in India. Threats of substitutes à ¢Ã¢â‚¬  Ã¢â‚¬â„¢ [Moderate] Substitutes coffee, cold drinks, fresh juices Existing customers are loyal The existing products quality and performance may be better. Substitutes price may be lower. As there are so many players in the industry a price war is unavoidable. Threats of new entrants à ¢Ã¢â‚¬  Ã¢â‚¬Ëœ [High] Encouraging government policies like food and beverages act. Large untapped rural markets for branded tea segment in rural India and Indian tea in global markets. 6.1 Porters Strategic Matrix Low cost High cost Narrow Broad Competitive Scope Source of competitive advantage Cost Leadership Differentiation Bogawantalawa Company Cost Focus Differentiation Focus Bogawantalawa Company chooses the Differentiation strategy because it involves creation company goods unlike from and more smart from competitors. Company do this depends on the accurate nature of tea industry and of the products and services themselves, but will naturally involve durability, also brand image, functionality, support and features that companys consumers value. To make a winner of a Differentiation strategy, companies require, Good research, development and innovation. The ability to deliver high-quality tea products. Effective sales and marketing, so that the market understands the benefits offered by the differentiated offerings. 7.0 Branding Strategy Make Your Global Brands Local Use Local Brands to Establish a Market Presence Grow Your Own Local Brands When Possible Recognize That Brands May Mean Something Completely Different Address the Liabilities of Global Brands Increasing customer loyalty Contribute to unproductive expenditures in operational areas that contradict what company brand stands for Company can modify ads, but the fundamentals of slogan, logo, and color need to basically look the same. Make small changes over time so that consumers wont get puzzled and lose the product. After all, if company change ad too much and consumers dont recognize it, then company just lost all of the good will, appreciation, and trust that company have built up with branding strategy over time.  If company does want to make huge changes all at once, then company wants to tell consumers about it. Company will need to momentarily increase advertising budget so that company can keep consumers educated, and not lose them. Company might consider a direct mail campaign, or television advertisements etc. company will want to change them regularly because if not it will get really bored with the branding strategy. Until the consumer is serious about making a purchase, they wont really pay close concentration to ads. Company will feel familiar to them because they have seen ads 100 times, but only when they are ready will they really read it. Same old boring advertisement will not bore customers. Do not change the overall look and feel of ads unless you dont get the sales as company expected. (Refer appendix 05 for Brand Positioning Matrix page No 26) 7.1 Positioning Statement A brands position refers to its place in the customers minds. Positioning creates a unique space for a brand, and succinctly articulates the position to the brands core target audience. The company wants to make customers mind if goes to make a tea, that time remember what the tea there is using. Bogawantalawa Company theme is quality tea for everyone they have target the audience who loves the tea can use Black tea and who willing to reduce the weight can use green tea.etc. 7.2 Product Strategy Product strategy based on the most current company and product vision. Product differentiation strategy when company and competing firms offer a product that fulfills the same need. In a product-differentiation strategy, company goal is to put distance between your product and competitors product. Essentially, competitor sells tea A, but you Sell tea B, in company strategy, company need to produce tea B so that tea lovers find Bogawantalawa tea to be superior to companies competitors. price-based product strategy, the goods is designed according to such things as cost-plus pricing that where company set the price of the product at the production cost plus a specific profit margin, value-based pricing that where the price is derived according to the products value in relation to competitors products, and target-return pricing that where you set a price in order to receive a certain profit return. Market share Market growth rate Low High Low High Product strategy Boston Matrix Star Question mark ? Cash Cow $ Dog By doing a market survey can find how products come to the BCG matrix. After looking at the matrix cash cow products and star products will be marketed. 7.3 Pricing strategy The point is here Bogawantalawa Tea Company cannot set a price that is too high because competitors will attract by potential profits and will follow by a lower price. After having taken all the important factors into consideration, there five price level fixing seem appropriate. (Refer appendix 06 for more details on pricing strategy page No 27) 7.4 Distribution strategy (Place) Tea will be distributed by these channels; supermarkets, independent food stores, convenience stores, multiple grocers, Bogawantalawa outlets and direct sales. (Refer appendix 07 for more details on distribution strategy and the action plan for five years page No 28) 7.5 Promotion strategies Promotional activities will convey that the clear massage of Bogawantalawa Tea is a healthy drink for daily tea drinkers, sporty and young and any generation who simply enjoy taking care of the body and the pure taste of a tea. There are some product promotional strategies such as TV advertisements, Radio, Magazines, outdoors, personal selling, public relations and publicity. (Refer appendix 08 for more details on promotional strategies page No 29) 8.0 Assumed budget and Risk management Risk management involves assessing and quantifying business risks, then taking measures to manage or reduce them. Its purpose is to generate ideas and promote good practice for those involved in the business of managing risk. All too often assessments of risk are crudely made and the consequences of getting things wrong can be serious, including lost opportunities, loss of business and loss of reputation. Administration the competitors in the market also will be an additional risk. This can be prevented by providing different and more quality products to the customers. Then the customers will not try to move towards the competitive companies in the market. And also Market Risk includes interest rate risk, foreign currency risk, and investment portfolio risk. Interest Rate Risk is the risk of financial loss from changes in market interest rates. As strategic risks we can say that, Governance Risk is the risk of having an inadequate structure or body to make effective decisions. Budget By having a budget companies can allocate the resources as they wanted. And also budget will help for the company to have an idea about potential expenses and fast expenses of the company. (Refer appendix 09 for assumed Budget page No 30) 9.0 Conclusion In this report included a five years marketing plan for Bogawantalawa Company. In this report, I have discussed about how Bogawantalawa Tea industry willing to move to new market in India and how to use suitable strategies and how to market the product in very competitive environment. For get to know about environment I have done a research on competitor SWOT, PEST analysis to get a better understanding about the environment. Also I have use some theoretical matrixes to get a clear idea how the markets moves and what are the products that we should market. And also I have discussed about pricing and better promotional strategies that company will find comfortable at last I have given some recommendations that would help the Bogawantalawa Company for potential achievement and capture market share in five years time. 10.0 Recommendations As recommendations for potential success we can suggest that Increase number of service outlets, In recent times there have been numerous tea and coffee shops bounce up in cities like Mumbai, Delhi, Bangalore etc Tea house shpul beset up in a similar fashion and premium quality teas should be served at these outlets. And also strategic alliance, Tie up with own range of five star hotels to supply premium quality tea also with lower end three star hotel and also local eateries. Tie-up with airlines, caterers etc to promote Bogawantalawa tea to the market. By tie up with these companies it will easy to build relationship with corporate customers and build a good customer relationship and also make popular the tea through them. And also own depots, To start own depots of Bogawantalawa Tea so that they can sell loose tea thus reducing cost of packing which will also reduce the Vat additional charges. Thus masses from lower income group would be effectively targeted. And also Launching of flavored teas bamboo cups in china bring it to India too. Launching of more flavors in India. And also Increase profit margins for retailers to achieve higher sales volume as they are the main influencing factors in lower income group people. And also providing a bundle pack like a small tea sachet free with 100 grams pack of  biscuits. 11.0 Reference Johnson, G, 2008. Exploring Corporate Strategy. 5th ed. Prentice Hall: Financial Times. Bohlander, Snell, 2007. Human Resource Management. 4th ed. USA: Thomson Higher Education. Jordan, Roass, 2006. Corporate Finance Fundamentals. 5th ed. Singapore: McGraw Hill. Global tea industry. 2011. Globa tea industry. [ONLINE] Available at: http://www.scribd.com/doc/28455965/Study-into-the-tea-industry-of-India. [Accessed 03 January 12]. India tea. 2011. India tea. [ONLINE] Available at: http://www1.american.edu/TED/indiatea.htm. [Accessed 04 January 12]. Four Ps for Bogawantalawa Company. 2011. Four Ps for Bogawantalawa Company. [ONLINE] Available at: http://investing.businessweek.com/research/stocks/snapshot/snapshot.asp?ticker=BOPL:SL. [Accessed 06 January 12]. Bogawantalawa Company. 2011. Bogawantalawa Company. [ONLINE] Available at: http://www.bplteas.com. [Accessed 06 January 12]. swot analysis india. 2011. swot analysis india. [ONLINE] Available at: http://www.indiadairy.com/ind_swot.html. [Accessed 07 January 12]. PESt analysis india. 2011. PESt analysis india. [ONLINE] Available at: http://www.scribd.com/doc/29980456/PESTLE-Analysis-of-India. [Accessed 09 January 12]. Competitor analysis . 2011. Competitor analysis . [ONLINE] Available at: http://tutor2u.net/business/strategy/competitor_analysis.htm. [Accessed 10 January 12]. Ansoffs Matrix . 2011. Ansoffs Matrix . [ONLINE] Available at: http://www.slideshare.net/sethaphat/starbucks-presentation-presentation. [Accessed 11 January 12]. BCG Matrix. 2011. BCG Matrix. [ONLINE] Available at: http://www.slideshare.net/prasadshahane/hul-final. [Accessed 11 January 12]. 12.0 Appendix 01 Current market position Promotion Insistent Marketing Strategy Bogawantalawa can take benefit of the encouraging force down on the health repayment on tea to enhance the sales of its ice tea product line. Foundation of its media releases and promotion campaigns Company can exercise current studies on the health repayment on tea. Improve Packaging The Bogawantalawa flavored Tea are available locally in two sizes, the 500g packet and 1Kg packet. Bogawantalawa can come up with additional wrapping sizes to make sure that customers will have additional choices and that Bogawantalawa flavored Tea will be simply and willingly accessible to customers. SWOT analysis for Bogawantalawa Company Strengths When we looking at the strengths of Bogawantalawa Company we can identify that company has a old industry record, long experience, new technical and man power skills, good research and development support, mostly they pick tea from their own estates so cost advantage, assets leverage, effective communication, innovations through experience in the company, loyal customers from long time because of the image of the company and the high quality, also market share leadership, strong management team, strong brand equity, every company should have financial sustainability so this will be great advantage for the Bogawantalawa company, strong supply chain, and having fair product price among the competitors. And also the quality control within the company is good. Company having a strong image in the local market, so it will be advantage when moving into new market. Weakness Basically min development investment, stagnant production, less effective cost management, declining exports are major weakness can see from the Bogawantalawa Company but there are some more such as diseconomies of scale, low R D, less online presence, less diversified, weak real-estate, the facility for the production of the tea have become obsolete. The growing stock is old and has lost productivity. Factory modernization is slow and there is an imbalance in the production ratio of orthodox. The productivity is low when comparing to the international players. Above mentions the main and weaknesses of the Bogawantalawa Company. Opportunities As opportunities we can see that quality and brand equity, export potential, big domestic market, financial institutional support, acquisitions, financial markets, emerging markets and expansion abroad, innovation, go through online selling and online marketing, takeovers, world demand is for black tea expected grow rate is 3.2% per year. The substantial part of demand coming from the developing counties, particularly middle east and CIS countries which has preference of orthodox tea. Also CIS counties willing to buy who providing good and quality product so this will be potential opportunity for the company. The future consumption potential in other markets is so high. Company produces a wide array of tea, from high quality light tea to strong dark tea. It can exploit this ability to expand the product line and diversify into related products. These are the major opportunities that company has identified. Threats Threats for the company such as open global competition, low cost in some countries (Kenya), uncertain price, cheaper technology, economic slowdown, external changes (governments, Tax and regulations, politics.etc), exchange rates fluctuations, maturing categories products, price wars and also product substitution such as soft drinks and coffee. Kenya has overtaken the Sri Lanka as the worlds largest exporter of tea, the technology development and product development is low when comparing to the competitors because of the cost factor. Stagnant infrastructure development may decrease the industrys ability to compete internationally. These are the main threats that Bogawantalawa Company has been facing on. Appendix 02 SWOT analysis of Tea industry in India Strengths We can see that main Strengths are such as Technical Manpower Skill- Due to a huge population base in India Technical and manpower Skill is available in plentiful. And also Demand for tea has been growing at some 2% per annum and should accelerate further. And good Research Support by tea growers has will help industry grow further. Weaknesses Major weaknesses are such as Supply from more efficient players like Kenya, China, Sri lanka. And also Labor intensive industry- The second generation labors is unwilling to join this industry therefore it could pretense a problem of skilled manpower in the near future. And also No efficient Cost Management system adopted by industries and other regulatory  bodies, and Declining Export of India over the years. Opportunities It will be benefit for the companies who exist for achieve future opportunities. The main opportunities are to come up with new flavors and formulation of the tea, tea houses to popularize the impression of tea in India, also Export Potential if India can increase its production capacity, and To make tea more acceptable and fashionable like coffee and Large untapped rural market for branded tea companies lile Hul and Tata Tea. These are the main opportunities can gather from the environment. Threats When we look at the environment of the India we can see that there are four main threats for the tea industry such as Low Cost in some countries like China, Sri Lanka and Kenya, Cost escalation on account of increase in the cost of production, Import of Tea from other countries and also global competition. PEST Analysis for Indian Tea industry Political factors Trade Agreements Employment laws Tax policy Trade restriction and Tariffs Political stability Environmental regulations Industry specific regulations Economic factors Demand for food and beverages Customers buying power Exchange rate and taxation Economic growth Foreign Investment Foreign Investment Interest Rate Raw material Availability Social factors Population growth rate Health Consciousness Social cultural changes Trend of Buyers Career attitude Consumer preference Change in life style and occupation Education Technological factors Advances in manufacturing IT developments Research and development activities Industrial