Analyze the marketing strategy of an organization, identifying the key success factors or indicators in the marketing mix and

the activities of the organization. Company: Tapal Tea (Pvt) Limited Company Website: www.tapal.com.pk Other Sources Used: Tapal s website, Press releases and other various websites Company s Motto: Never Compromise on Quality Company s Popular Slogan: Tapal Makes Tea-Time Terrific Tapal Tea is the no.1 tea selling company in Pakistan and is a private entity. The company has been able to instill creativity in its media advertisements which shows that it has typically understood the nation s perception of tea. The company s arch rival being Lipton Tea, a division of the multinational Unilever. Tapal has built its customer loyalty over the years through what they consider a confident and stable marketing strategy. Tapal was started as a family business in the year 1947. Today the company is proud of being the largest, 100% Pakistani owned Tea Company in the country. (http://www.tapal.com.pk) For confidentiality purposes, detailed strategies have not been discussed in this report. However, a fair idea of the approach the company has taken up will be discussed in this report. The company follows a flexible marketing strategy similar to others that are faced with a fierce competition. It has eight different brands of tea and implements a different marketing strategy for each of them. Classifying the products on a BCG matrix helps in presenting a better picture about each product. This approach serves as a method of understanding the company s better performing brands in the market. The company s products have been charted-out in the diagram below:

RELATIVE MARKET SHARE High Stars Low Question Marks

High MARKET GROWTH RATE Tapal Danedar Tapal Family Mixture Cash Cows Low Tapal Mezban Tapal Gulbahar Green Tea Dogs

Tapal Chenak Tapal Tezdum

Tapal Safari Tapal Jasmine

Tapal Danedar and Tapal Family Mixture are considered as the golden brands . Tapal Tea is credited to be the first company to introduce the Danedar brand. This type of tea is slightly different and better in taste and gained so much popularity that other companies imitated this product and came up with a similar brand of their own. Tapal Gulbahar Green Tea has good future prospects. It is one of its kind and there is a possibility of shifting to the Stars category. Tapal Safari and Tapal Jasmine have not yet produced as much revenue as their fellow brands, the reason being insufficient advertising. Tapal Chenak and Tapal Tezdum have found more popularity in the rural areas of interior Sindh, Pakistan. It can be observed through the products advertisements that the target market was well thought out. The various brands give Tapal Tea an edge over Unilever s Lipton Tea. Lipton Tea has only three brands of tea in Pakistan whereas Tapal Tea has eight of them. These entire eight brands have introduced a unique taste of their own. Therefore, Tapal Tea

provides its consumers with variety which comes as an important factor in any business being carried out.

MARKETING STRATEGY MODEL The company is consistent with its marketing strategy model. For all brands, new and old, it adopts the rational model of formulating a marketing strategy. This provides a systematic way of defining the purpose and attaches a value to the strategy.

Mission & Objectives

Environmental Scanning

Strategy Formulation

Strategy Implementation

Evaluation & Control

(http://www.quickmba.com/strategy/strategic-planning/)

The rational model assists in defining and taking account of all various variables that cast an impact on the organization s strategy. For example, the Environmental

Scanning is concerned with an internal analysis of the organization ( SWOT analysis) along with an analysis of external macro environmental factors ( PEST analysis).
(http://www.quickmba.com/strategy/strategic-planning/)

During the Strategy Formulation, it is made sure that all objectives of the strategy are consistent with the objectives of the organization as a whole. A very general corporate appraisal of the entity using the SWOT Analysis is presented below: SWOT Analysis Strengths: y y y y y y y y High market share Higher brand image Addresses the varying demands of differing tastes Good relationship with suppliers The only private tea company in Pakistan involved in export Innovators of the famous Danedar brand Makes good use of technological advances High quality is maintained throughout

Weaknesses: y y Market follower approach is a defensive tactic compared to its aggressive marketing strategy Product placement may well be a problem since the company is a private company

y y

The advertising is not as frequent as that of the competitors Not recognized internationally

Opportunities: y y y y y Exports Expansion in the international market Sri Lankan and Indian market could be explored further Upgrading to a multinational status from a private company could lead to more financial sources being available Wide base of human resource available

Threats: y y y y WTO impact may open doors for new entrants Lipton Tea s highly geared marketing strategies Entrance of the international brand Tetley into the market Its aggressive marketing policies might force competitors to adopt aggressive tactics in their defense

IMPACT OF BUDGETING ON MARKETING STRATEGY Budgets are allocated over a one year term. The task of drawing up a budget is assisted by a sub-department of the Marketing department called the Marketing Research Department which provides them with future sales trends. Tapal subscribes to and conducts various researches in the area of retail audits, consumer behavior, media planning and product development. This research is used for continuous improvement in product quality, brand positioning and communication according to the changing requirements of the consumer.
(http://www.tapaltea.com.pk)

Budget allocation is conducted on grounds of experience and future market trends identified by the company s research department. Assumptions regarding future market trends are well-calculated and thoroughly analyzed by senior managers.

The company s accounts that show a special child account in the parent account of Sales Promotion. This sub account comes under the name of Attack Plan and its details include costs incurred for massive ad-hoc advertising campaign . This shows

that the company is prepared to counter-attack any new marketing campaigns introduced by its competitors. It also shows that the company takes these as a major threat and retains enough funds to backup a technically sound contingent marketing plan. The company acknowledges the importance of marketing and relies heavily on it. It doesn t find the need to draft a strategy annually and seems confident with its marketing strategy. The life span of the marketing strategy is 3-5 years and logical incrementalism seems to have been followed by the company as it involves small scale extensions of past practices. Thus, every time a new strategy is devised, it is an extension of the old one shaped up according to the changing circumstances. The Marketing Department doesn t seem to be fond of entertaining brand new marketing ideas. This is because in such a competitive milieu, the company is afraid to lose its stability. THE MAIN INGREDIENT OF MARKETING STRATEGY & HOW IT PROVIDES COMPETITIVE ADVANTAGE TO TAPAL TEA The company faces severe competition from the Unilever tea brand Lipton Tea, which forces it to adopt a value based pricing strategy. Value-based pricing is a method of pricing products in which companies first try to determine how much the products are worth to their customers. The goal is to avoid setting prices that are either too high for customers or lower than they would be willing to pay if they knew what kind of benefits they could get by using a product.
(http://www.computerworld.com/news/2000/story/0,11280,42848,00.html)

From the various techniques that Tapal Tea can use to facilitate itself with value-based pricing, a Value Chain Analysis (Michael Porter) is conducted to help locate which

processes add value to the product and which ones don t. The picture below is a demonstration of Value Chain Analysis which is discussed further;

(http://www.marketingteacher.com/Lessons/lesson_value_chain.htm)

To analyze the specific activities through which firms can create a competitive advantage, it is useful to model the firm as a chain of value-creating activities. The goal of these activities is to create value that exceeds the cost of providing the product or service, thus generating a profit margin.
(http://www.quickmba.com/strategy/value-chain/)

Value-based pricing helps the company gain a competitive advantage.

The entity

works hard to understand how the consumers value its products and thus, how much they re willing to pay for it. MARKETING MIX Obviously, a different marketing mix for each brand is being followed by Tapal Tea. A very general marketing mix has been drafted taking the whole company into

consideration. However, the marketing mix for Tapal Chenak has been provided in this report for a better understanding.

Marketing Mix for the whole company

Marketing mix for Tapal Chenak

Product: Price:

Tea Lower income (ValueBased Pricing Strategy) Place: Distribution networks Across Pakistan Promotion: Culture-based

Product: Price:

Dust Tea Lower income (ValueBased Pricing Strategy) Place: Interior of Sindh Infrastructure Promotion: Culture-based

KEY SUCCESS FACTORS PRODUCT: Creation of a Brand Name has helped Tapal become the most prestigious tea brands in Pakistan. The company has long passed the Introduction Stage in the Product Life Cycle and has been operating at the Growth Stage and delaying Maturity by offering new products every now and then. This gives the company a definite edge over other tea companies. Quality of Packaging also counts as an important factor in creating a value of the product in the customer s eyes. The color scheming used in its packaging is different and unique from other tea companies and Tapal Tea has always been consistent with it. The quality of paper used in the packing keeps the tea crisp and fresh for the customer. Styling and font used by Tapal Tea brands also makes its products stand out. Tapal should however, still be credited for using a good color contrast with all brands packaging.

PRICE: The company adopts Value-based pricing as its Pricing Strategy. It knows exactly at which level the market will accept a price and comprehends how exactly its consumers value its product . Tapal Tea sells its products to resellers at a higher retail markup than Lipton Tea. Due to this factor, retailers are themselves interested more in selling Tapal Tea to consumers. This is a vital part of the company s marketing strategy. When compared with Lipton Tea, retailers are expected to sell large quantities of Lipton Tea to compensate for the low markup. It sells most of its brands at a fixed retail price all over Pakistan. Tapal adopts Seasonal Pricing to stabilize its earnings and sales throughout the year. This itself does not provide competitive advantage in a proper context, but helps in soothing out the earnings and sales. PLACE: Tapal has developed fast and hassle free Distribution Channels of its own. It does not share its distribution channels with any other entity. Lipton Tea for instance, has seven distribution channels, and every single one of them is commission based and not owned by Lipton Tea. Tapal has a wide Market Coverage ranging from UAE to USA. Internationally, Tapal faces immense competition from Lipton (Unilever) and various other tea brands. However, on a national scale, Tapal still enjoys being the favorite undisputed tea selling company. The company has its own Transportation and means of delivering stock. Inventory Management is also in-house. All inventory information systems are up to date with the latest technological developments available in Pakistan.

PROMOTION: A great deal of money is spent on Advertising. The company considers mass media advertisement as its way of communicating with the masses . Public relations and Publicity have always been sound for Tapal since the very beginning. The company is proud of its reputation of being a 100% owned private Pakistani company.

HOW THE CURRENT MARKETING STRATEGY RAISES BARRIERS TO ENTRY The mass media advertisements on cable television make Tapal Tea look extremely strong. Despite being a private entity it spends heavily on advertising. Hence, any new entrant will for sure be intimidated by Tapal Tea s advertisements and its level of spending on advertising. It has set the benchmark for new entrants too high for them reach. Thus in order to establish themselves, the new entrants either end up spending more than required or get daunted by the idea of a huge spending on advertising. Various other marketing campaigns and schemes over the years have helped Tapal create a good brand image and strong customer loyalty. For example, the current marketing strategy also included free sampling of its new brands in the interior of Sindh (this was the place targeted for promotion of new brands). Tapal Tea s

frequent marketing campaigns have made it a popular company and along with its sound financial history, it has developed a strong bargaining power over its suppliers.

OTHER FACTORS RELEVANT TO THE MARKETING STRATEGY Tapal Tea enjoys its reputation of being the innovators of the Danedar brand. Other companies have also imitated this brand but the psychological impact that the organization has left on the people (of being the first to do so) has established a unique brand loyalty amongst the consumers. A brand's name is perhaps the most important

factor affecting perceptions of it. In the past, before there was a wide range of brands available, a company could name a product just about anything. These days, however, it is necessary to have a memorable name that conjures up images that help to position the product.
(http://www.quickmba.com/marketing/ries-trout/positioning/)

The company undertakes a lifecycle analysis of its tea brands.

This is critically

related to the marketing approach for a specific brand and thus, directly related to the marketing budget allocated to it. It has a brand-specific marketing strategy and each brand undergoes a rigorous analysis before its marketing strategy is drawn up. However, the company remains consistent with its approach of formulating a strategy (i.e. applying the rational model). By doing this, the organization makes sure that all objectives are clearly communicated and the purpose of the strategy is consistent with that of the whole organization to achieve goal congruence. The profits have increased since the marketing strategy was implemented. However, it should be noted that this trend has continued over the history of the entity and the steady increase in profits might not always have much to do with the current marketing strategy. The marketing department is appraised every three months. Sales and profits are the measures against which the appraisal is carried out. This again shows that the appraisal might not actually be worth the time it takes. The company should also find other yardsticks against which it should appraise its marketing department. Such yardsticks can definitely be non financial measures. The following figure shows sales in kg tons of Tapal Tea compared with Unilever s Lipton Tea for four years;

35.00 30.00 25.00 20.00 15.00 10.00 5.00 0.00 2004 2003 2002 2001
Tapal Lipton

Tapal Tea offers retail markup of at least Rs.3 on all its brands to retailers, which is more than twice what Lipton Tea offers (i.e. Rs.1.40). Price offered to consumers and retailers has always been a vital tactic of the marketing strategy of Tapal Tea. The company enjoys a fair lead over its most daunting opposition. The aggressive marketing strategy is the reason why Tapal Tea has become the most dominant tea company in Pakistan.

RECENT MARKETING CAMPAIGNS Tapal Tea is always coming up with different ideas to counter attack its competitors marketing campaigns. It should be noted though, that hardly any of these plans are adhoc. Tapal Tea remains consistent with its marketing strategy and this shows how much faith the company has in its existing strategies. Recently, Tapal Tea launched its own program on local radio by the name Tea Time. Apart from that, various other schemes are also in place which offer discounts to consumers. Another scheme which now has expired, offered free tea bags with three large packs of Tapal Tea.

At a recent event, Tapal Tea was offering free samples of tea. There is hardly any time of the year when Tapal Tea is not seen on the billboards. The marketing department seems to be exceptionally active and prepared throughout.

RECENT ACTIVITIES OF THE ORGANISATION Tapal has just recently started exporting tea to Italy. The company places great

confidence and faith in its research activities. All statistics and figures required to move ahead with a strategic plan are provided by the Marketing Department. The company exploits current opportunities and plans accordingly for the future with the help of its Research Department. The performance of this department is hence to an extent directly related to the successful marketing strategies. According to the data gathered, the company does not have any special activities lined up apart from its never ending marketing campaigns. But it should be noted that sponsoring musical evenings and live concerts are a part of the entity s public relations activities. Only recently, on the occasion of Eid in Pakistan, Tapal Tea organized three musical events which were shown on a popular cable television channel on all three days of Eid. The organization currently has a lot of celebrities working as Brand Ambassadors.

CONCLUSION Tapal Tea s marketing strategy formulation has its own pros and cons. In technical terms, budget allocation is considered as a tactic which is used to attain an objective as set by the marketing strategy. The company allocates budget to a marketing

strategy on an annual basis. The company is always ready to slightly alter its strategy at a given point in time to counter attack its rival s marketing campaigns. A formal rational model helps to clearly identify objectives and takes into account all the elements that might influence its strategy.

If considered in a larger context, Tapal Tea takes nearly all possible steps to maintain its market share. The entity considers marketing as a strategic weapon. Its marketing policies and tactics have always been aggressive. The strategy formulation is re-drafted after every 3-5 years. And the company utilizes the rational model of strategy making. Using the rational model for marketing strategy is believed to be too time consuming. It takes into account various factors that remain constant over a long period of time. People are afraid to question once such a strategy is implemented because of the time and effort put in it. And above all, the rational model is used when a strategy is being implemented from scratch. However, the strategy making process also depends on the various other factors such as the organization s age, structure and internal politics. Also by refusing to accept new ideas to infuse in the marketing strategy, the top level manager might just be de-motivating the employees and might be discouraging initiative. Sometimes employees have a direct contact with consumers and are able to get a better feedback from consumers than senior managers. Therefore, creativity should be encouraged as Tapal can afford to experiment. Another interesting thing that should be noted is that the marketing department is appraised every three months. Such a short term appraisal sometimes becomes more of a routine procedure just to fulfill the formality of performing a task. Compared to the life span of the strategy, the time interval between appraisals is just too short. A massive marketing campaign might not even produce meaningful results to examine in such a short time period. Although, the company has introduced at least two new brands of tea lately, it has not altered its basic pricing strategy for the new brands, i.e. value-based pricing. A

different pricing strategy such as market penetration could be tried out. Tapal enjoys a fair lead over its rival Lipton Tea. Tapal Tea s history reveals that the company tried out market penetration to out stead the then favorite Lipton Tea. Perhaps, the entity has gained such a great proportion of

the market that now they believe value based pricing is better in today s market. It should also be noted that the company has not diversified into other businesses like its competitor. Lipton Tea is one of the several hundred divisions of the multinational company, Unilever. Tapal Tea considers innovation as the key factor behind its success. An excerpt taken from the company s own website provides shows various areas in which it has excelled because of innovation: Always on the move, Tapal Tea is honored to have taken the lead in a number of areas in the tea industry. Tapal has been: The first to introduce soft packs in the country. The first tea company to introduce metal-free tea bags. The first to develop an entirely new blend and category-Tapal Family Mixture (the mixture of leaf & dust). The first to invent the highly successful brand Danedar Leaf Blend. The first to market Kenya teas in Pakistan. The first tea company to be awarded the ISO 9001/2000 Quality Certification
(http://www.tapaltea.com/saga_of_success.htm)

When examined from a bird s eye view, the marketing strategy of Tapal Tea serves just right for a privately owned company. But it should be noted, Tapal Tea s methods of evaluating its marketing strategy fails to serve the rationale behind the appraisal. This might again be because the company might be satisfied with how things are currently going as it is enjoying an era of Market Leadership.