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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

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

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 1 Source 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 Lipton Taaza Ispahani Brooke Bond Red Label Finlay Zareen Others Source2 Sales (kg) 212.85 285.9 100.1 50.9 170 178 % 25.7% 34.7% 12.2% 6.2% 20.2% 21.2%

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 Ispahani Mirzapor Lipton Taaza Zareen Brooke Bond Red Label Finlay Source3 Rank 1 2 3 4 5

1 Retrieved from the URL: http://bizcovering.com/business/beverage-marketing-in-bangladesh-with-a-special-reference-todistribution-management-of-tea-brands-an-empirical-study/#ixzz1xkDQqAGv 2 As of source1 3 As of source1

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 5

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

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: Consumer Rationale Retailer Rationale

Strong brand loyalty overriden by retailer influence Variety seeking behavior Dominant peer pressure from family and friends Moderate sensitivity to taste differentials

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

UNILEVERS TARGET QUOTIENT: ANSOFFS 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 Ansoffs Matrix can be formulated as follows: Existing Product Existing Market Taaza brand and yellow label tea-bags that are served to an upper market segment A different flavor could be introduced to the upper market segment of the country New Market Existing brand that may be served to lower consumer market segments consisting of the Middle-of-the-Pyramid (MOP) or Bottomof-the-Pyramid (BOP) sections 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

Current

New Product

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

Yes

No

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:
Existing MarketNew Product

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.

New MarketNew 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.

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

Enhance consumer mind-set

Added value (more for the same)

1. Integrated and retailerdirected 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 upperclass 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, Its 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

NEW PRODUCT LAUNCH Among the premium segment of Bangladesh, a new product range of Lipton can be introduced given that particular segments 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:
Reasons 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. Resources 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. Results 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.

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.

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