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Brand Management

CASE SOLUTION:

ANALYSIS OF LIPTON TAAZA BRANDING STRATEGIES

Prepared for

Dr. Ehsanul Huda Chowdhury

Course Instructor

Prepared by

Md Imran Shikdar (ZR 64)

BBA 17th

Institute of Business Administration

University of Dhaka

15 June 2012

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QUESTION 1:

Do you think Lipton is taking the right strategic branding decisions by not introducing any

new blend or flavored tea in Bangladesh? Explain.

Lipton, a tea brand promoted by Unilever in Bangladesh, has already penetrated successfully in

the upper class segment of the country. An icon of the multinational conglomerate, the brand has

been acquired in multiple phases. The success story behind the brand centers around its unique

blending and taste offers that cater to core satisfaction of its consumers. Despite the fact that

Unilever has promoted multiple layers of the brand with different tastes and blending mixes in

other countries, only a limited range of the product is provided in Bangladesh. However, a

proactive conclusive remark about the brand warrants a closer observation of the current market

scenario.

MARKET BRAND PORTFOLIO

Marketing system of Bangladesh tea is defined as the process of manufacturing tea in bulk or

packaging it from tea estates to the buyers at Chittagong Auction where teas are sold either

directly to overseas buyers or to internal traders. Ispahani Mirzapur (the Brand of Ispahani) is

the leading brand in our country. It is the most available tea in our country followed by Taza,

branded by Unilever Bangladesh, which is the main competitor of Ispahani being at the second

position by covering 96% of the stores. The popular brands in the market are: Ispahani

Mirzapur, Ispahani Zareen, Lipton Taaza, Lipton Yellow Label, Finlay, Duncan, HRC and

Shaw Wallece. Among these brands, Ispahani, Duncan and Finlay own their own tea gardens

while Lipton is made from tea leaves manufactured in local tea estates.

BRAND PENETRATION RATE

The stock of tea is totally dependent on the retail outlets location, sell, size etc. In residential

areas and the bazaars the sale trend looms higher. In the tea-bag market segmentation Ispahani

Mirzapur leads the competition at a marginal level in striking comparison with Lipton Yellow

Label tea-bag. Tea-bags are mostly sold in commercial areas, hotels and restaurants. The key

statistics are as follows:

Ispahani is the most popular brand name in Chittagong in terms of sale. The average

stockpile per store is at least 2.287 kg.

Closest brand is Lipton Taaza of Unilever Bangladesh. The average stockpile per store is

at least 2.001 kg.

1. Available Store Brands: A recent survey in Chittagong has disclosed that Ispahani is

exclusively controlling the market, being the dominant player. Lipton Taaza is giving a close

competitive role-play to gain market share but statistics shows that the brand is still second to

Ispahani. Other brands are not that popular among the retailers and serve mainly the niche

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markets. However, the market share of Finlay is not negligible. The overall market structure

shows that the industry is based on an oligopoly in terms of tea-packets and tea-bags.

Brand Penetration (%)

Ispahani 97

Ispahani Zareen 92

Lipton Taaza 96

Finlay 64

Duncan 6

HRC 20

Shaw Wallace 2

Lipton Yellow Label 68

Source1

2. Weekly Sales: In the above mentioned survey, weekly sales in respondent stores were

observed closely for a particular week. As usual, Ispahani Mirzapur sales turned out to be the

highest, followed by Lipton Taaza. However, it is noteworthy that in terms of weekly sales, other

brands did not perform much less as expected. The sales review for that particular week is shown

below:

Brands Sales (kg) %

Lipton Taaza 212.85 25.7%

Ispahani 285.9 34.7%

Brooke Bond Red Label 100.1 12.2%

Finlay 50.9 6.2%

Zareen 170 20.2%

Others 178 21.2%

Source2

3. Top five brands: The retailers’ view was collected regarding which brand was the dominating

the market position. Market concentration is very strong in this case as evidenced by stiffer

competition among the major three/four players. The ranking of the industry major players is

shown below:

Brands Rank

Ispahani Mirzapor 1

Lipton Taaza 2

Zareen 3

Brooke Bond Red Label 4

Finlay 5

Source3

1 Retrieved from the URL: http://bizcovering.com/business/beverage-marketing-in-bangladesh-with-a-special-reference-to-

distribution-management-of-tea-brands-an-empirical-study/#ixzz1xkDQqAGv 2 As of source1 3 As of source1

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CURRENT MARKETING STRATEGIES BY MARKET PLAYERS

Ispahani is still the market leader despite a strong consumer brand loyalty to Lipton Taaza. This

is due to the fact that Ispahani has certain retail strategies that are yet to be adopted by other

brands. The retail marketing is successful in this case because local consumers of tea are not that

oriented to a particular tea brand as tastes of different brands differ slightly. Besides, tea

consumers are oriented to go for more variety of tea; this clearly demonstrates that even a strong

brand loyalty may not be sustainable in the long run. The current marketing strategies of Ispahani

are described below:

1. Price Promotion: Ispahani can offer a lower price for its tea packets to the retailers

because it has its own tea gardens. So, dependence on the suppliers is limited. Ispahani

has effectively managed to outdo its competitors through its price control power mainly.

2. Retail Coverage: The top two brands, Ispahani Mirzapur and Lipton Taaza, have

attempted to satisfy retailers through effective sales teams, ensuring that retail problems

be identified and tackled from time to time. According to retailers’ point of view, both

brands are promoted extensively by sales teams of respective companies.4

Survey

remarks of respondent retailers are described below5:

16% voted for Ispahani.

10% voted for Uni-Lever Bangladesh Ltd.

74% voted for both.

3. Replacement: Both companies replace any unsold/obsolete stocks piled up at retailers’

points. This has been an area of caution for the brands because companies do not want

any retailers to spread unfavorable message to the final consumers or even to other

retailers for unsatisfactory treatment.

4. Credit facility: Ispahani Mirzapur has a unique policy to get much more shelf space at

retail points. It has a message for its retailers: “Sell first, then pay.” Under this message,

retailers are not bound to pay upfront and so they can buy bulk. Retailers want to promote

the brand so that a continuous higher margin can be achieved through ongoing credit

facilities and without any fixed cost of inventory. Unilever Lipton Taaza is attempting to

replicate the model but still the retailers are primarily disposed to favor the Ispahani

brand for its credit offering.

However, retailers cannot differentiate properly between the top two brands: Ispahani Mirzapur

and Lipton Taaza. This happens primarily because both companies offer substantial marketing

offers to the retailers. The market is this considered to be retail-driven, rather consumer-driven.

4 Retrieved from the URL: http://www.bukisa.com/articles/601178_soft-drinks-marketing-in-bangladesh-a-study-on-tea 5 As of source4.

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ANALYSIS OF MARKET RATIONALE

Overall market rationale can be projected from two fronts: Consumer rationale and Retailer

rationale. As stated earlier, the tea-packet market is basically concentrated in the retail segment

given the fact that retailers are able to influence final purchasing behavior. Following is an

illustration of the overall market rationale:

UNILEVER’S TARGET QUOTIENT: ANSOFF’S MATRIX

In light of the overall market scenario, brand penetration rates, competitors’ strategies and

market rationale, Unilever should add on to its current marketing strategy as an extended game

plan. The market is saturated with available brands; however, there are minimal differences

among the core product benefits of different brands. Hence, it will be counter-intuitive for

Unilever to stick to its current marketing strategy. A new product offering should be introduced

to the market to increase the relative market share by tapping into a different consumer segment.

In this regard, an Ansoff’s Matrix can be formulated as follows:

Existing Market New Market

Existing

Product

Taaza brand and yellow

label tea-bags that are

served to an upper market

segment Cu

rren

t Existing brand that may be served to lower

consumer market segments consisting of the

Middle-of-the-Pyramid (MOP) or Bottom-

of-the-Pyramid (BOP) sections No

New

Product

A different flavor could

be introduced to the upper

market segment of the

country Yes

A different flavor under a different brand

name could be introduced to tap into

growing future market penetration potentials

by entering the MOP market segment Yes

1. Existing Market- New Product: Unilever should consider introducing a different flavor to its

current market segment given the moderate sensitivity of its current consumers to subtle taste

differentials as well as its strong retailer coverage to influence the consumer buying decision.

The key reasons for this strategic approach are as follows:

Consumer value: Ispahani is having the same competitive advantage as Unilever has in

terms of retailer coverage. The brand loyalty of consumers to Ispahani is exclusively

Consumer Rationale

• Strong brand loyalty overriden by retailer influence

• Variety seeking behavior• Dominant peer pressure from family

and friends• Moderate sensitivity to taste

differentials

Retailer Rationale

• Bargaining power: HIGH• Predisposed to have higher credit

facility and other incentives• Concerned about a proper and timely

inventory management• Influnetial power over consumers'

purchasing decision

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demonstrated in Chittagong. To win a market share from Ispahani, Unilever should bring

a new flavor to the current market so that variety-seeking-consumers will turn to the new

flavor.

Leverage over potential competitor actions: Ispahani and other competitors may

introduce a different flavor long before Unilever introduces. The opportunity cost of not

introducing a new flavor to the current market is, therefore, high.

2. New Market- New Product: Unilever has so far catered to the upper market segment of its

consumers. However, it has not entered the MOP segments of the consumer pyramids, which

primarily determine their purchasing decisions based on price, rather than quality or taste.

Unilever can enter this market introducing a different brand which will offer considerably lower

cost rather than higher quality.

PROMOTIONAL STRATEGIES

To align with the above stated strategic approaches, Unilver should adopt suitable promotions

strategies as follows:

1. Introduce a different organic flavor to promote a new healthy lifestyle among consumers. 2. Introduce a sub-brand Taaza All-time to promote health and organic features of the new flavor 3. Target the segment which is health conscious and want to consume fewer calories. 4. Promote the new value proposition through retailers. 5. ATL strategies (TV ads, Billboards etc.) to let people know about the first ever organic tea brand. 6. BTL communications through doctors and paramedics. 7. Selective promotions at corporate offices to attract business executives.

Existing Market-New Product

1. Introduce a low-price but minimal-quality brand Ek Kap Cha to cater the MOP segment of the market. 2. Attach the middle income group with the brand through a new value proposition: Quality Tea Everywhere Everytime. 3. Tap into the segment of students and middle income working class who frequently go to nearby tea stalls to have low-quality tea, saying “Ek Kap Cha Den To Mama”. Through the brand Ek Kap Cha in mini-packs, these people would want to have a minimal quality with an affordable price even at tea stalls. 4. Target the MOP segment through BTL promotions involving the tea-stall owners. 5. Promote through ATL promotions at initial stages to let people know about the brand.

New Market-New Product

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QUESTION 2:

According to you how Lipton can develop their Brand Equity? Advice one new product as line

extension for the Bangladesh market that you think is having demand locally from the mixes

and blends of tea that has been shown in the case study which is not launched yet in

Bangladesh.

BRAND EQUITY EXTENSION

Lipton can develop its brand equity in multi-lateral phases. However, it must always be

remembered that consumer loyalty in case of food brands might be staggering given that

Bangladeshi consumers seek variety in making food and beverage decisions. No strong brand

loyalty is observed yet. This clearly substantiates the fact that that a subtle difference made by

Lipton might not be able to win significant brand equity from its consumers. Hence, a significant

differential strategy should be adopted to surge the brand equity of its consumers. This could be

done in phases as follows:

Retail marketing

1 Enhance consumer mind-set

2 Added value (more for the same)

31. Integrated and retailer-directed inventory management tools to optimize higher brand penetration

2. Decorations at retail points

3. Watermark provisions to give incentives for sales higher than a benchmark

1. Indirect influence through retailers

2. Promotions at upper-class restaurants & hotels

3. Focus on pull-based marketing messages like: “Only You Can Identify the Difference” to make consumers differentiate themselves upfront

1. Introduce a new flavor for existing market prices

2. Introduce a new reality show, It’s Tea Time to involve public figures have a discussion about ongoing issues over a cup of tea. Coupons will be given with the tea packs so that consumers can participate in the event.

+ Because retailers have a greater bargaining power and control the overall market

+ Because a favorable perception will persist in the consumer mind-set overriding other brands

+ Because consumers are getting extended values for the same price; expectation is exceeded

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NEW PRODUCT LAUNCH

Among the premium segment of Bangladesh, a new product range of Lipton can be introduced

given that particular segment’s health awareness and available blend mixes. Lipton Herbal Tea

could be a possible line extension given the current market scenario where the premium-paying

people are becoming more oriented to a healthy lifestyle. The optimum target range will hover

around the current market segment, offering a distinct product value as well as subtle but

substantial differentiation. The launch of this new product range is described below:

Hence, it is clear that the new product launce is likely to serve a distinct market needs at this

point. However, Unilever must consider any potential competitor reactive strategies, especially

from Ispahani Mirzapur. To counter these potential competitor strategies, Unilever should take

proactive measures involving consumers and intermediaries because at the end of the day, price

war or any such aggressive strategy will not be successful in an oligopolistic market.

Differentiation through creating value is what matters most in this case.

•Current target consumers are becoming more and more health conscious.

•Competitors may enter the distinct-market-value segment first resulting in a significant shortfall in current market share of Lipton.

•Competitors ,who have their own tea gardens, might be in a competitive leverage because of the ability to offer a low price coupled with the first-mover's advantage.

Reasons

•The traditional tea leaves available in the country are needed.•Mango, Lemon and Orange are three available fruits to produce a herbal tea mix.

•Different distributors' cannel is not needed because the new product will serve the same market segment.

Resources

•Higher and long-lasting brand equity•Promotion of a secure and value lifestyle•Increased market share through premium sales•Less spillover effect on current brands because of differing value propositions; current brands cater to tastes while the new launch will cater to health.

Results