Marketing Strategy Plan

Of

Pyramid Tea

For Strategic Marketing Management

Submitted by:

Nabeel Ahmed- 2804

Submitted to:

Ms. Salma Rehman

Submission Date:

24th December 2010

CONTENT

Executive Summary 4Introduction 4Situation Analysis 5Market Analysis 5Dimensions Of Market Analysis 5Business Market Dimension 6Market Size 7Market Potential 7Market Structure 7Market Trends 7Environmental Analysis 7Opportunities & Threats 8Company Analysis 9Company’s Mission Statement 9Marketing Mix Assessment 9Company’s Brand Image 10Assessment Of Company’s Strength & Weakness 10Customer Analysis 10Macro Environment 11Micro Environment 12SWOT Analysis 12Objective 13Target Market 14Marketing Strategy 14Product Strategy 15Price Strategy 15Placement & Distribution 15Promotion Strategy 16Budget 16Conclusion 19

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ACKNOWLEDGEMENT

We are very thankful to Almighty Allah, who gave us the strength and courage to accomplish this task.

We are very grateful to our teacher, Ms. Salma Rehman who gave us an opportunity to study and create a detailed report on the strategic marketing plan of a hypothetical company, Pyramid Tea Manufacturing Company, as a project for the course “Strategic Market Management”

We wish to express our sincere appreciation to all those persons who have contributed either directly or indirectly in this project. We wish to thank firstly our teacher Ms. Salma Rehman for giving us this opportunity; we would also like to acknowledge the suggestions of our friends. Finally, we would like to thank our families, specially our parents for their support through this ordeal.

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EXECUTIVE SUMMARY

In this report we have discussed the marketing strategic of a newly born tea, Pyramid Tea by Pyramid Tea Manufacturing Company. The marketing strategic plan is made after considering all the relevant information of the macro and micro environment as well as all the resources of the company. Although the company is in its introductory stage but with the help of its good finances and qualified professional staff the profitability of the company will be boosted in the near future. This report also covers the marketing analysis of whole industry which describes the market size, structure, trends and potential. Moreover environmental analysis is also covered in this report which tells about the external forces that can affect the company. SWOT analysis is also included in the report so that the readers can quickly get to know about the strengths, weaknesses, opportunities and threats of the Pyramid Tea. Company’s mission statement is clearly mentioned in the report along with situation analysis, market analysis, environmental analysis, competitor analysis and customer analysis. All these information helps the company define its objectives, its target market, marketing strategy and budget. Finally, the implementation of the plan and control procedures is there.

INTRODUCTION

Pyramid tea is a newly launched tea manufacturer in Pakistan whose aim is to deliver top

quality tea to its consumer. The annual demand of tea in Pakistan is about 140 million kilograms

and the major competiting brands are Lipton, Supreme, Tapal and Brooke Bond pyramid tea

emerged in the year 2010, despite being in its introductory stage the company is providing

superior tea product for millions of Pakistani. By delivering quality products in a short span of

time the Pyramid Tea Manufacturing Company has developed a good brand name and

is recognized as one of the leading tea makers of the nation.

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SITUATION ANALYSIS

Pyramid Tea is a newly launched product and so is the Pyramid Tea Manufacturing Company hence it is in an introductory stage. Company has to build its brand image and perceived quality; it has to make strategies and plan objectives to maximize profit, take place into the market to increase its share values.

Pyramid Tea is building cordial relationships with supplier for establishing an extensive distribution network. It is targeting customer from rural areas as well as urban areas specially youngsters, house wives, and professionals as well. Pakistan is the one of the largest country where tea consumption is in high quantity so targeting the entire populace of Pakistan will definitely be beneficial for the Pyramid as Pyramid Tea has enough resources, specialty and ability to make a remarkable place in the market.

To attract people Pyramid Tea exports high quality tea from the Kenya and it’s newly ever made packaging n the shape of a pyramid is quiet unique and attractive for Pakistani market. The packaging is in very beautiful design and very handy for everyday use because of its strength. This newly introduced packaging will attract people, as it will also be useful for the opportunities it provides to the people of Pakistan; they will see the good change in the packaging of tea.

Pyramid Tea has strong competitors that can affect the target market of Pyramid Tea like Lipton, Tetley, Tapal, Brooke Bond, and Taiz Dam which are the strong brands so the strategies for beating them won’t be easy. The marketing plan therefore has to consider all these details.

MARKET ANALYSIS

Market analysis builds on customer and competitors examination to make some strategic judgments about the market (and submarket) and its dynamics. One of the primary objectives of a market analysis is to determine the attractiveness of a market or sub market to current and potential participants. Market attractiveness, the market’s profits potential as measured by the long term return on investment achieved by its participants will provide important input into the product market investment decision.

A second objective of market analysis is to understand the dynamics of the market. The need is to identify emerging sub market, key success factors, trends threats, opportunities, and strategic uncertainty that can guide information gathering and analysis.

DIMENSION OF MARKET ANALYSIS

The nature and content of an analysis of a market and its relevant product markets will depend on context, but will often include the following

Emerging submarkets Actual and potential market and submarket size Market and sub market growth Market and sub market profitability Cost structure

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Distribution system Trends and development Key success factors

BUSINESS MARKET DEFINITION

The term business market refers to the group of consumers or organizations that are interested in the product, has the resources to purchase the product, and is permitted by law and other regulations to acquire the product. The market definition begins with the total population and progressively narrows as shown in the following diagram

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MARKET SIZE

As we know that it’s a local brand and it’s a new brand in tea industry thus it’s in an introductory stage. The current market size of our product is 5% of the total tea industry because its catering the lower class and this 5 % is an assumption because we are launching the product.

MARKET POTENTIAL

The future potential of our product is to capture high market share in the industry because it is a less expensive product that’s why in the near future it has a great opportunity to grow in the industry.

MARKET STRUCTURE

There are many firms in the tea industry; the direct and indirect competitors of Pyramid Tea are Lipton, Tetley, Tapal, Brooke Bond, and Taiz Dam. Taiz Dam is a direct competitor because it has low market share about 3 % in the industry while Tapal has the market share of 14%.

MARKET TRENDS

As we have mentioned above it is a local brand and it is catering the lower class market so we have to give free sachets for promotion and awareness of the product; doing so will increase our sales in the near future. It will be further elaborated in Competitor’s Analysis.

ENVIRONMENTAL ANALYSIS

Social and Cultural Forces

In Pakistan tea industry, society and culture plays an important role in determining the demand, developing the marketing plan and formulating business strategies. The non-alcoholic Islamic society, traditional hospitality culture, increasing prices of cola beverages and increasing poverty levels are the main driving forces of Pakistani Tea Industry. Although the growth rate is low, these forces are responsible in growth of tea industry.

Political and Legal Forces

The tea market is very much dependant on political and legal forces. Tea industry is suffering due smuggling but due to certain political reasons i.e. the relations with Afghanistan and scarcity of employment opportunities in bordering areas with Afghanistan restrict Government of Pakistan to take preventive actions. Taxes and Excise duty are of real importance for tea industry a minor change in duties may affect the balance of legal and illegal imports resultantly it influence the profitability of tea marketers.

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Technological Forces

Technological forces that may apply to tea industry are good machinery for refining and packaging and an efficient distribution network equipped with latest technology. The distribution network must have an efficient ordering and delivery system enforced with a fleet of delivery vehicles. In tea industry latest machinery for packaging and refining is important but an efficient distribution network is most important. Pyramid has latest machinery for refining and packaging, but in distribution pyramid is lacking behind its competitor Lipton which has a modernized distribution network. Lipton and Tetley being international firms have an upper hand in bringing new technological changes fast as they are financially strong.

Economic Conditions

Changes in economy have a major impact on tea industry. High inflation rates hamper the buying power of consumers resultantly they reduce consumption, as tea is not a necessity of life. Good economic conditions boost the industry in shape of enhanced buying and consumption. This is also evident from the previous market size and growth, as described earlier, when in year 2008 the consumption of tea dropped despite reduction in international prices. The main reason behind this was unfavorable local and international economic conditions.

Inflation plays a major role on the marketing strategies used by a company due to two main reasons. Firstly, inflation affects the consumers’ psychology and they become more selective in their purchases. Secondly, inflation results in increased prices for the raw materials, which in turn increases the cost of production. This factor plays a major role especially if the increase in cost cannot be transferred to the consumers in the form of enhanced sale prices. To combat this monster effective cost minimizing strategies have to be adopted by pyramid. These strategies should be focused in simplifying production processes by continued research and development process.

OPPORTUNITIES (O)

Expanding Rural Market Shift of customers from cola drinks to low cost drinks Growing awareness among persons regarding medical benefits of tea Exports

THREATS (T)

Illegal imports under umbrella Afghan transits trade Internationally increasing  tea prices High inflation rate within country Deterioration buying power of consumers  Shortage and increasing prices of electricity

COMPANY MISSION STATEMENT

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“Never compromise on quality" has been the motto at Pyramid Tea since its birth. The commitment to quality will eventually result in a high level of customer satisfaction and unflinching brand loyalty.

MARKETING MIX ASSESMENT

Increase market share Generate brand awareness within consumer target market and business target market. The road ahead promises plenty. The goal is to move the brand portfolio from its current

19% value share to a 25% value share in the medium term

PRODUCT

Pyramid Tea is a new brand in the market. Apart from building and strengthening brand imagery, the company has significantly increased its focus on delighting the consumer through the superiority of its product delivery.

PRICING

The company is concentrating on building value around its brands to distinguish it from competitors. The median price for a 250-gm pack in Pakistan is approximately Rs 42.50. Pyramid Tea plans to win away these consumers through its branding initiatives. On the basis of prices, the largest segment of the packed tea market is economy at 61% where the average tea price is less than Rs 145 per kg; followed by the popular segment where pricing is in the Rs 145-180 per kg range and then the premium end beyond Rs 180 per kg.

DISTRIBUTION (PLACEMENT)

Placement is done by the best known and established dealers and retailers. The following distribution channel would be used for distribution of the products in the neighboring cities. For the purpose of Physical flow of the product, Information flow, Payment flow, Promotion flow

Distribution Plan

PROMOTION

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Manufacturer Wholealer Dealer Retailer Consumer

Create an advertising campaign to build brand awareness and differentiate products quality from competitors through emphasizing trade-sales promotion to support distribution strategy. Pyramid Tea’s brand-building initiatives are focused on taste, quality and imagery.

COMPANY BRAND IMAGE

The brand is new in the market as the name of pyramid that’s why it takes time to gains it market share because there are giants in the market like Lipton, Tetley, Tapal, Brooke Bond, and Taiz Dam that’s why in competitors mind it’s a cheap brand because its new in the market.

ASSESSMENT OF COMPANY STRENGTH AND WEAKNESS

STRENGTHS (S)

Localized Tea brand Vast Experience ranging from lose tea retailer to marketers/manufacture of well

recognized brand of high quality tea Integrated Production Process Commitment for Quality Continuous R & D

WEAKNESSES (W)

“Seth” like culture Distribution network relatively weaker than competitors Less retail outlet coverage Less resources as compared to No. 1 competitor

CUSTOMER ANALYSISWithout customers, a business cannot survive therefore at Pyramid it’s our topmost priority to duly identify the needs and wants of customer and deliver the value they expect from us. The term customer refers to not only to current customer for a given product but also both customers of the competitor and current non-customer of the product. Though we are only going to talk about our product a strong flavor & taste. Originally developed for hot tea shops, Pyramid Tea has become a favorite amongst household consumers as well. It is the most popular brand of tea in Sindh. A small quantity of Pyramid produces a strong cup, which makes it both suitable for domestic use but even more for the hot tea shop consumers who prefer a quick strong bright cup.

Each customer is unique to some degree. Target marketing is typically efficient for a product like tea, because tea is the product which is being consumed by all age.

Company will make positions through advertisement; through electronic and print media the potential customers will be targeted. Company’s advertisement delivers following message

Quality tea

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Better and beautiful design packaging Make within minimum time

MACRO ENVIRONMENT

Political Environment

The tea market is very much dependant on Political forces. Foreign investors are attracted to Pakistan as diversification strategies. The Pakistan government is on a regular effort improving business relations with trade and investment partners in US and Asia. Tea industry is suffering due smuggling and ATT but due to certain political reasons i.e. the relations with Afghanistan and scarcity of employment opportunities in bordering areas with Afghanistan restrict Government of Pakistan to take preventive actions. Taxes and Excise duty are of real importance for tea industry a minor change in duties may affect the balance of legal and illegal imports resultantly it influence the profitability of tea marketers.

Economical Environment

In Pakistan, high inflation rates definitely impact the consumption level of consumers. But here the economy is becoming more saturated. The rich are becoming richer and the poor families are becoming poorer. However due to the overall economic developments, the life style of the people is improving and thus purchasing power has enhanced. Tea comes under the beverage category, thus when the income level of the house hold increases its expenditures increase that of luxurious items than food and beverage.

By keeping in mind the per capita income of the people of Pakistan, we intend to launch Pyramid Tea, aiming at the high and upper-middle income groups, who are willing to pay a premium price for such an innovative and distinct product. Pyramid Tea is considered to be a superior product as it is distinct from the conventional tea available in the market by the competitors, in the sense of its form, taste and nutritional attributes.

Social Environment

In Pakistan, the concept of tea is that of a hot drink that is served with milk, which is taken in the leisure time. However launching Pyramid Tea is quite a challenge as the people in Pakistan are not only resistant to change but also have rigid views about the concept of tea itself. Still tea industry having growth just because the other indirect competitors like cold drinks increasing their prices and increasing poverty levels are the main driving forces of Pakistani Tea Industry. These forces are responsible in growth of tea industry.

Technological Environment

Technological forces that may apply to tea industry are good machinery for refining and packaging and an efficient distribution network equipped with latest technology. We do much too focus on our packaging, the pyramid shape tea box looks and it colors should

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attract the customers. The distribution network must have an efficient ordering and delivery system enforced with a fleet of delivery vehicles. In tea industry latest machinery for packaging and refining is important but an efficient distribution network is most important for availability of product.

MICRO ENVIRONMENT

Customers

We have a diversified customer base ranging from urban to rural areas including various institutions like Hotels, hospitals, corporate clients and Departmental stores, trading stores, and retailers and international buyers.

The need identified of the market is everyone wants to refresh their mind while doing routine works. Thus the product would be used by children, teenagers and young adults.

Competitors

For Pyramid Tea, the direct competitors belong to the tea and the indirect competitors are of the beverage industry. These competitors are market leaders or at least definitely strong challengers on their own and have a strong image in the minds of the consumers.

The market leaders have opted for mass marketing, aiming to attain maximum market share, hence in hope of maximizing their profits. Whereas we are about to launch a relatively new product, therefore we have chosen to take out our tea in Karachi and Hyderabad in the form of selective marketing. The consumers we hope to attract belong to the upper and the upper-middle class. The competitors in the tea and beverage industry have the first mover advantage and also cause of this they have had enough time to establish a proper brand name for them. Because they have not lonely have had a higher market share, but these companies are also backed by large corporate names such as Tapal, Lipton and Brooke Bond.

SWOT ANALYSIS

STRENGTHS

The first to introduce pyramid type tea bags Pyramid shaped bags were pioneered to others provide more room for infusion of the leaves Delivering faster and better infusion. The first tea company to be awarded the ISO 9001/2000 Quality Certification Following different flavors are available in different markets

White Tea Green Tea Earl Grey tea Gold Tea

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Red Tea Tuscan Lemon

WEAKNESSES

Pyramid Tea competitors which are internationally well known and are in the market before pyramid came into being. So the revenue generation of this company is more than pyramid

As pyramid is totally Pakistani based company so it is not usually preferred abroad

Therefore, export of this product is almost nil

OPPORTUNITIES

Increase tea usage can provide opportunities to introduce new flavored of tea Tea is mostly in demand in the local areas. And pyramid is easily reachable in

such areas because of their accepted prices and varieties according to the taste of consumers

Initiatives in price pack category as to capture value from price sensitive customers

Rapid growth in population

THREATS

Attraction for new entrants in the industry High inflation rate within country. Shortage and increasing prices of electricity. New policies of the government i.e. import duty, excise duty etc

OBJECTIVES

To develop strong distribution network, improve the number of distributers from 35 to 45 which would result in 45% outlet coverage of both retailers and wholesalers. This will lead to 17 to 20% sales revenue

To attract customers by its well design and innovative packaging and which will preserve the freshness of tea for a long time

To capture the tea market for working on future growth

These objectives would lead to increase in the sales revenue up to 30% and profitability will rise up to 15 %.

TARGET MARKET

Each customer is unique to some degree. Target marketing is typically efficient for the product like tea, because tea is the product which is consumed by the people of all ages and from all walks of life.

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There are variety of customers which the company has to target, they include:

School and college going students prefer tea which could be prepared in a very short time period as they have a hectic schedule and have to manage time accordingly to give adequate time to studies, pyramid tea therefore has offered pyramid tea bag for this sector.

Housewives need convenience so pyramid tea bag offer them convenience and quality simultaneously giving them sufficient for other household chores.

The following bar chart shows the consumption percentage of Pyramid Tea, it is an online survey conducted by Pyramid Tea Manufacturing Company.

College Student 15%

Household 20%

Professionals 29%

Collage studentHousehold

Professionals

0%

10%

20%

30%

Pyramid Consumption

Series1

MARKETING STRATEGY

For the target market the company has developed the marketing mix using the 4P’s which will eventually form the marketing strategy of the company for the target market.

PRODUCT STRATEGY

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For producing better and consistent quality product the company signs a 3 years contract with Kenya Tea Development Agency (KTDA) which is the highest earning company in Kenya and widely known for its premium quality. This contract will extend further after 3 years if the company and consumers are satisfied the product they are being offered. So this contract enables the company to deliver tea for a continuous time period, no shortage will occur of the product. This will facilitate the company to deliver its good quality tea consistency. Since, Pyramid Tea packaging is introducing pyramid shaped packaging for the first time in Pakistan, which is more comfortable more striking than others. Company hardly works on packaging. As good quality product is also offered by other companies like Tapal, Lipton, Supreme etc but Pyramid Tea takes competitive advantage on its packaging. It has also long preserved time. It provides 20% extra preservative time than competitors, it will also go for tea bags. Pyramid Tea bags are also in pyramid shape which can easily dissolve in water thus it is better tasting and consistent quality product. It is applied as product strategies. Product is available in following size with its percentage of production.

Sachet 30%60 gm pack 20%125 gm pack 20%250 gm pack 15%Tea bags 10 %

The percentages of production, for all the available sizes, are produced after extensive research of usage amount by consumers.

PRICE STRATEGY

Pyramid Tea is producing better quality product with great packaging so it price cannot be less than its major competitors like Tapal, Supreme and Lipton. Pyramid Tea will charge in accordance with the price charged by competitors. Since Pyramid Tea is charging these prices in its introductive stage so this will be successful strategy at that time. Price will be same in every region of the country. This pricing strategy is for current growth stage while in future or its maturity stage price can be changed according to inflation and various external and internal factors. Following is the table depicting the prices of different sizes:

Sachet 5 Rs60gm pack 20Rs125 pack 40Rs200 pack 80 RsTea bags 100 qty 110 RsTea bags 150 qty 160 Rs

PLACE AND DISTRIBUTION

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Pyramid tea develops its own 800 distribution network in major cities of the country with efficient qualified people. That will result in the great advantage of delivering products on the time. There will be no risk of bad relationship neither it can be copied by competitors.

Pyramid tea locates its distribution networks in major cities of Pakistan like Karachi, Lahore, and Islamabad etc where there is high market growth. In these major cities of the country Pyramid tea achieves its target market better. This place strategy is for current growth stage of the company but in the near future pyramid tea spread its distribution network from urban areas to rural areas of the country.

PROMOTION STRATEGY

Pyramid tea is in growing stage so it needs greater advertisement. There are various promotional activities prevailing through print media and electronic media. In print media we advertise on news papers and magazine; news papers are Jung, Daily Dawn, The News and Express and magazine are Masala, Dalda ka Dastarkhuwaan, Akhbare Jahan. Billboards are also used as a medium of advertisement by pyramid tea. In electronic media Pyramid tea is the main sponsor of Geo TV morning show “Chai with Nadia Khan” in which the brand used of chai is Pyramid tea. That is targeting house wives, professional and students also because the program is very famous in which Nadia Khan interviews famous celebrities. Pyramid tea has also signed a year contract with Expo Center for the next 1 year in every exhibition pyramid tea will be used, which will eventually increase its sale and also will target the different people at different exhibition like female and youngster by fashion exhibition, student through educative exhibition and so on. It will result in high percentage of sales. Also visits by various female colleges and universities and organization.

BUDGET OF PYRAMID

FINANCIAL ANALYSIS

Total start-up cost of our Pyramid Tea will be 90000. This includes through which our tea is delivered, its utilities, rent, other expenses placing stalls in different universities and cash on hand.

The projected financial analysis is done on semi-annual basis.

SALESTea bag sold=1000Average price /tea bag=10Total sales=100000 Fixed costElectricity 5000Rent 10000Other expenses (telephone, internet) 10000Total fixed cost 25000

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Variable cost 35000

Income Statement

Sales 100000 Variable cost 35000Contribution margin 65000 Fixed cost (25000)Gross profit 40000Operating expenses (10000)Net profit 30000Break-even point (in units)BEP = fixed cost/cm per BEP = 25000/6.5 BEP = 3846

IMPLEMENTATION

What How Who When

SUPPLY CHAIN MANAGEMENT

Integrate Supply Chain

effectively.

By using ORACLE-ERP to its optimal utilization.

Supply Chain Manager

Immediately and then quarterly

PROCUREMENT AND SOURCING

Identify maximum suppliers from global market

Identifying the countries that are manufacturer of tea then directly order them instead of any

middle man, so you can bring significant savings.

Purchasing Officer

Continuous process

PRODUCTION AND INVENTORY MANAGEMENT

Decrease Operating Costs to

By master production scheduling of all production processes and operations and by controlling

Inventory Control

Continuous process

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cope up with inflation.

wastage and efficient and effective utilization of resources to achieve maximum output.

Officer

WAREHOUSE AND SAFETY STOCK

Warehouses should be near at production unit

It will bring much saving for transportation cost

Store Manager

Within few months

CHANNEL AND DISTRIBUTION NETWORK

Distribution

By outsourcing more third party distributors in grey areas identified

by marketing managers

Marketing manager and supply chain manager

through periodical surveys

Immediately and then quarterly

MARKETING STRATEGIES

Effective promotion and advertisement

strategy

By Using different awareness programs activities and celebrity endorsement Pyramid Tea will

enhance the customer base management.

Senior and Middle

marketing and sales people.

Immediately effort till Pyramid Tea has reach on maturity

stage

RESEARCH AND DEVELOPMENT

Upgrade Research and Development.

Through research and comparing packing of our products and competitors products packaging.

Through increasing investment in R & D by 10%.

R & D Department

By End of 2010

CAPTURE THE LOOSE TEA MARKET

Capturing loose tea market

Perusing policy makers to restrict tea volume under Afghan Transits Trade to actual demand of

Afghanistan. At company level special group will be formed which will study market and propose cost

effective measures in packaging as loose tea lovers are mostly price conscious

Integrated effort of relevant

department

After approval of

feasibility

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HUMAN RESOURCE MANAGEMENT

Increase capabilities of

workforce.

Through training and development specially for

SAP-ERP

Senior and Middle management (HR, IT &

Marketing)

Continuous process

TECHNOLOGY

Set up specialized manufacturing plant to cater

children segment.By investing in new

plants and equipment.

Senior and Middle management (HR, IT &

Marketing)

Continuous process

CONCLUSION

Pyramid tea is in the introductive stage and has to achieve its objectives that are to maximize profit, to improve distributor network and to make good and consistent quality product. For achieving objectives marketing strategic plan is made which defines the amount of budget required, how to target customers, how to improve product quality, how to deal with competition and various other factors. So by implementing of this report company can achieve objectives.

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