Tata Tea Analysis Essay

2009 Tata Tea Marketing Plan (Marketing Management-I) Table of Contents Situation Analysis________________________________________3 Rationale behind Choosing this Brand________________________8 Market Research________________________________________10 Competition in Tea Industry_______________________________13 SWOT Analysis_________________________________________17 Marketing Objectives____________________________________19 Marketing Strategy______________________________________20 Marketing Action Programs_______________________________23

Implementation_________________________________________26 Financial requirements_________________________________28 Customer Survey (Appendix)____________________________30 1. Situation Analysis About Tata Tea Tata Tea first came into the existence in 1964 as a joint venture between UK-based James Finlay and Company and Tata Tea to develop a value-added product. At present day Tata Tea Group of Companies is the second largest global brand in tea industry. The group comprises Tata Tea Inc. in India and UK based Tetley Group.

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These groups came together in 1992 to form a JV and subsequently Tetley was acquired by Tata Tea to form a major market force. The group has presence in more than 40 countries with significant market share. Operations in India comes under the purview of Tata Tea where as the overseas operations are controlled by Tetley Group. Both the brands are distributed as per the location. As Tata is a trusted name in India, Tata tea is pushed in the Indian market and markets where there are substantial Indians. Tetley forms the company’s global face and the largest markets focus on the Tetley brand.

There are few markets where both the brands coexist, in such locations Tetley is marketed as the premium brand. Tata Tea group of companies get 86% of the total revenues from the worldwide business of branded tea whereas the 14% comes from other sources such as Bulk Tea, Coffee, and Investment Income. Two third of the Tata Tea Ltd. revenues come from Tetley group businesses. We will be primarily focusing on the global Tata Tea market with an add-on on Indian market in this report. Current Status Tata Tea global number two in tea Tata Tea, part of the gigantic Indian Tata Group, is the number six hot drinks company in the world, with a value market share of nearly2%. * The company’s hot drinks presence is chiefly in tea, in which it is the global number two. It is a mass-market player. * Tata Tea has a broad regional, if not global profile, although its presence is concentrated in a relatively small number of markets, led by India and the UK. Tata Tea targets wider beverage future * The company has embarked on an aggressive acquisition-led growth strategy in recent years, focusing not only on hot drinks but also soft drinks. Tata Tea has made hot drinks purchases in the US, the Czech Republic and Poland, while it has also pursued the development of its bottled water and RTD beverage portfolios. * Organic growth at Tata Tea has been driven by a change in focus from volumes to a better product mix, including more premium launches. Tata Tea is basically working for the right international mix. The focus is on having a common marketing systems and creating a global database for market and data collection. Thus, enabling a better control over the market parameters.

Tata Tea is actively pursuing diversification of its product portfolio to include green tea, rooibos, fruit and herbal products to reduce its dependence on black tea and to develop into a beverage company. In the forecast period, the company is expected to look out for acquisitions and launch new products in bottled water and RTD tea. In the forecast period, Tata Tea is expected to strengthen its presence in premium tea by launching wellness products such as Tetley green tea, specialty estate teas as well as flavored tea, targeting high-end consumers.

Simultaneously, the company is predicted to continue pushing for higher volumes in rural areas through its regional brands, by focusing on low prices and widening its distribution. The government policies in the recent years have been very favorable to the tea industry in India and Tata Tea has leveraged the fact to the maximum. They have forayed in different locations such as Czech Republic by taking over Jemica, the brand capturing the 26% local market. Tata Tea is also working along with the Tea Board of India to launch Indian tea in new markets and rejuvenate the marketing campaigns in the existing Markets.

As per the plans, Tata Tea is expanding to the new markets, where the brands will be introduced by way of “soft launches”. These regions include the Gulf countries, West Asia North Africa (WANA) countries, Syria, Jordan and certain markets in the Far East. The Tetley Group will offer the Tetley brand in most of the developed markets of the world, as well as in Pakistan, Bangladesh and Russia Financial Assessment Net sales of the company grew by 12% to Rs. 4,874. 0 crore from Rs. 4,336. 3 crore in FY08 on the back 10% growth in tea business and 20% growth in coffee business. Operating profit as Rs. 50. 5 crore, 8% down compared to FY08 mainly because of increase in consumption of raw material on account of hardening of commodity prices. OPM declined by 303bps to 13. 4%. Interest cost declined drastically. Net profit before exceptional items increased by 21% to Rs. 530. 8 crore on account of increase in interest outflow. Other exceptional items include restructuring cost of Rs. 23. 8 crore, provision for retirement of Rs. 54. 9 crore, expenses of new business initiatives of Rs. 5. 9 crore and amortization of employee separation scheme of Rs. 8. 9 crore net of profit on sale of investment of Rs. . 1 crore. Net profit for the year was Rs. 831. 9 crore, not comparable with last year as it included onetime item of profit on sale of investments in Energy Brands Rs. 1,607. 5 crore. Acquisitions * Tata Tea has expanded massively in recent years, largely through acquisitions. This aggressive growth strategy has allowed it to increase its net sales and profit levels significantly. * However, the impact of the general economic downturn is beginning to show. Rising auction tea prices have put pressure on margins, while its tea share is coming under pressure in the UK, the US and Australia.

Impact of global economic crisis * The effect of the global economic crisis became more apparent in recent months. While Tata Tea posted a 17% increase in net sales for the nine months to 31 December 2009, the rise was thanks largely to its acquisition-led expansion, and net profit growth was a modest 6. 5%. * The company’s strong exposure to the recession-hit UK market is likely to be negatively impacting organic growth, while the restructuring required in the wake of its recent acquisitions in the US and Europe is also affecting resources. Flat growth in Tetley affected top line growth: Net sales of Tetley (Tata Tea’s 78. 8% UK subsidiary) were flat at Rs. 2,406. 3 crore in FY09, 4. 6% up compared to last year. Net profit for the year was Rs. 775. 8 crore compared to Rs. 93. 9 crore last year. Tetley contributed 49% to Tata Tea (consolidated) revenues and 93% to its net profit. Tata Tea Ltd. has made 4 acquisitions while taking stakes in 6 companies. Tata Tea Ltd. has 5 divestitures since last ten years. Indian Presence In India, Tata Tea is number among the top brand in tea industry.

It manufactures 70 million kilograms of tea, has 27 tea estates, ten tea blending and packaging factories and employs around 59,000 people. Tata Tea also has a robust distribution network in the country. It comprise of 38 C;F agents and 2500 stockists which caters to over 1. 7 million retail outlets (Source: ORG Marg Retail Audit) in India. The company also has a 100% export-oriented unit (KOSHER ; HACCP certified) manufacturing Instant Tea in Munnar, Kerala, which is the largest such facility outside the United States.

Tata Tea has been ranked 20th among the 275 power brands (195 consumer products and 80 service brands) in the Most Trusted Brands Survey conducted by The Economic Times. Company| Month/Year| Divestiture/Stakes/Acquisition| Consolidated Coffee Ltd| June 2009| Divestiture| Mount Everest Mineral Water| August 2007| Stakes| Tata Coffee| January 2007| Stakes| Energy Brands| September 2006| Stakes| Jemca| July 2006| Acquisition| FMALI Herb and Good Earth Teas| October 2005| Acquisition| Tetley| February 2000| Acquisitions| Tata Iron and Steel company| August 1999| Stake|

Tata Tea Ltd| June 1998| Stake| Rationale behind Choosing this Brand: The company is a growing firm with the international presence. They are expanding their operations in India as well as in other nations. The choice of this brand will give us an opportunity to look at the international market and how an Indian MNC works in such a competitive market. Further, in India also the marketing strategy of the company has changed and is communicating with the client in a way that is very much different from a normal marketing strategy.

These two rationales have been further elaborated in the following. In Indian market, the recent past the there was a drastic change in the marketing strategy of the some of the Top Brands. Even after attaining the top position in the market there was an effort towards egalitarian way of brand building. And this trend has been observed across the industry. As a result many corporate initiatives form the top brands are addressing one or the other social cause with their marketing strategy.

Similar is the case with the Tata Tea, where the country’s one of the largest selling branded tea and the company’s flagship brand – Tata Tea – took a new initiative to take its position in the market to newer heights. The brand has revamped its packaging and communication strategy. The new communication endeavours to define and add meaning to the company’s “Bush to cup” vision. It emphasizes on the detailing and the R&D efforts to ensure the finest quality leaves, manifesting the company’s passion for providing the best value to its consumers.

A commitment that is reflected in the consumer’s fondness and liking for the brand across the nation. A relationship that has been nurtured over the years through a consistent delivery of great taste in every sip. The communication aligns the brand with the modern day consumer by portraying vibrant, youthful and modern user imagery. While it cues upper middle class personality to build stronger aspiration values, it still retains an essence which is relatable by the cross section of its varied users. Over the years Tata Tea has come to stand for trust coupled with a strong and credible plantation tradition.

The brand enjoys strongest mind-share among tea labels and has the highest penetration in various markets. Through its new communication Tata Tea is therefore rightfully laying claim on being the nation’s first choice in tea. Tata Tea’s initial advertising campaigns primarily communicated the physical and functional aspects of the brand like packaging, freshness, taste, energy, etc. However, after attaining market leadership (in terms of volume share), Tata Tea elevated its communication efforts to the self-actualization level and positioned itself as a catalyst for social-awakening, through Jaago Re! a holistic 360 degree advertising campaign using the unique route of social awakening Marketing Communications campaign. As part of this campaign, Tata Tea aired commercials on social problems – corruption, bad roads, irresponsible politicians, etc. This creative marketing tool was very effective. The launch of this new technique of campaigning was done during the election time, this right timing ensured that their message reached far and wide to all of their audiences. The objective of this campaign was twofold- It helped consolidating their brand image and further creates an image of a socially responsible organization.

Through the new communication campaign Tata tea intends to put the bigness of the Tata Tea story in front of the consumer – bigness in terms of size and taste; bigness in terms of Tata Tea’s vision and commitment to bigness in terms of the tremendous R&D which goes into the product. The re-launch platform is therefore rooted in the “number one” status of the brand and the communication seeks to bring out the width and depth of the Indian consumer’s relationship with the taste of Tata Tea.

These all facts has been really intriguing as this strengthen the argument that even being at the top doesn’t mean you can rest and you need to innovate continuously to remain there. But one of the more important challenges is to where to go from there. There are various options which available – expand geographically, diversify or increase penetration –but being the in a competitive and stable market each of the move will be challenged and developing a marketing successful strategy will be really a challenge. Market Research World Market

Tea is a widely used beverage all over the world, only next to water. The four types of tea most commonly found on the market are black tea, oolong tea, green tea and white tea, all these different kinds of tea are made from the same bush but processed differently. In the case of fine white tea the bush is grown differently. The major competitive countries around the world in tea are Sri Lanka, Kenya, China and Indonesia. Of which China is the major producer of green tea while Sri Lanka and Indonesia are producing mainly orthodox varieties of tea. Kenya is basically a CTC tea producing country.

While India is facing competition from Sri Lanka and Indonesia with regard to export of orthodox teas and from China with regard to green tea export, it is facing competition from Kenya and from other African countries in exporting CTC teas. Indian Tea Industry India was the top producer of tea for nearly a century, but recently China has overtaken India as the top tea producer due to increased land availability. Indian tea companies have acquired a number of iconic foreign tea enterprises including British brands Like Telly and Typhoo. One of the most important foreign exchange contributors for the country is the Indian tea.

There is an inherent growth in export earnings from tea over the years. India is also the world’s largest tea-drinking nation. However, the per capita consumption of tea in India remains a modest 750 grams per person every year due to the large population base and high poverty levels. Tea has become an essential in domestic consumption and is the major beverage in India. One of the reasons for this is the cost. Tea is considered as the cheapest beverage amongst the beverages available in India. Tea industry has also largely contributed towards the upliftment of the unemployed in the country.

They employ more than a million workers mainly drawn from the backward and socially weaker section of the society. It provides sizeable amount of revenue to the State and Central Exchequer. Tea plantations in India are mainly located in rural hills and backward areas of North-eastern and Southern States. Major tea growing areas of the country are concentrated in Assam, West Bengal, Tamil Nadu and Kerala. The other areas where tea is grown to a small extent are Karnataka, Tripura, Himachal Pradesh, Uttaranchal, Arunachal Pradesh, Manipur, Sikkim, Nagaland, Meghalaya, Mizoram, Bihar and Orissa.

Consumptions India is famous for its tea production. In the year 2007 India contributed to produce 30% of the tea. It consumes 23% of the total tea produced worldwide. The above pie diagram is based on 2007 statistic. It is about the top five tea producing and consuming nations. Estimates of (Internal) Consumption and Per capita consumption of Tea in India Market definition Tea is indigenous to India and is an area where the country can take a lot of pride. This is mainly because of its pre-eminence as a foreign exchange earner and its contributions to the country’s GNP.

In all aspects of tea production, consumption and export, India has emerged to be the world leader, mainly because it accounts for 31% of global production. It is perhaps the only industry where India has retained its leadership over the last 150 years. The range of tea offered by India – from the original Orthodox to CTC and Green Tea, from the aroma and flavour of Darjeeling Tea to the strong Assam and Nilgiri Tea- remains unparalleled in the world. Market size With previous year’s growth rate of 13% in off-trade value terms tea industry has reached sales of Rs. 45 billion in 2008.

The total turnover of the tea industry is around Rs. 10,000 crores. Since independence tea production has grown over 250%, while land area has just grown by 40%. There has been a considerable increase in export too in the past few years. Total net foreign exchange earned per annum is around Rs. 1847 crores. The labour intensive tea industry directly employs over 1. 1 million workers and generates income for another 10 million people approximately. Women constitute 50% of the workforce. Tea trading in the domestic market is done in two ways- Auction and Private Selling.

Competition in Tea Industry % Retail Value| 2004| 2005| 2006| 2007| 2008| Hindustan Unilever Ltd | -| -| -| 32| 31. 7| Tata Tea Ltd | 20. 9| 21. 8| 22. 5| 23. 8| 24. 2| Duncans Industries Ltd | 6. 3| 6. 2| 6. 6| 6. 5| 7. 4| Wagh Bakri Ltd | 3| 2. 9| 2. 9| 2. 9| 3| Goodricke Group Ltd | 1. 4| 1. 6| 1. 7| 1. 6| 1. 5| Golden Tips Tea Co Pvt Ltd | 1. 3| 1. 3| 1. 4| 1. 4| 1. 4| Girnar Food ; Beverages Pvt Ltd | 1. 2| 1. 3| 1. 3| 1. 3| 1. 2| Twinings Pvt Ltd | 0. 8| 0. 8| 0. 8| 1| 1. 1| Jay Shree Tea ; Industries Ltd | 0. 8| 0. 8| 0. 9| 0. 9| 0. | Gopaldhara Tea Co Pvt Ltd | 0. 6| 0. 7| 0. 7| 0. 7| 0. 7| Lochan Tea Ltd | 0. 5| 0. 5| 0. 5| 0. 6| 0. 5| Kho-Cha Darjeeling Tea Bureau | 0. 4| 0. 4| 0. 4| 0. 3| 0. 2| Hindustan Lever Ltd | 33. 1| 32. 4| 32. 5| -| -| Private Label | 2. 6| 2. 2| 2. 2| 2. 2| 2. 2| Others | 27. 1| 26. 9| 25. 6| 24. 6| 24. 2| Total | 100| 100| 100| 100| 100| Hindustan Unilever with Brooke Bond and Lipton was the leader in tea with a share of 32% in 2008. Tata Tea followed as a close second with a share of 24% through multiple brands such as Tata Tea, Agni Dust, Kanan Devan and Tetley.

Regional brands such as Wagh Bakri and Duncans increased their visibility in 2008 with aggressive marketing through the use of celebrity endorsements and creative marketing strategies such as setting up tea lounges to attract urban consumers and retailing through the post offices to reach rural consumers. Regional and national players face stiff competition from the unorganised sector as unpackaged teavendors have a large consumer base for their low quality cheap teas. Duncans Industries saw the greatest increase in off-trade value share in 2008.

The company revamped its brand portfolio in mid 2008 with the prelaunch of its flagship brand Duncans Double Diamond and the launch of several new brands including super-premium brand Duncans Double Diamond Gold and economy brand Aaag. It also moved into green tea with Duncans Double Diamond green tea bags. The company also engaged in a concerted marketing effort to improve its visibility and brand recall through institutional sales tie-ups with Indian Railways Catering and Tourism Corporation. It is also pursuing tie-ups with Bharat Petroleum Corporation and Hindustan

Petroleum Corporation. The company expanded its consumer base by introducing Aaag to target consumers shifting over from unpackaged tea and increased its presence in the rural market by distributing its products through post offices. Domestic brands dominate the marketplace as they are cheaper and have a longstanding presence in India and significant brand recall built over generations. As tea is a staple in most households, consumers are very particular about the taste of tea and tend to favour the brands that they have been familiar with over many years.

Only a handful of international brands including Tetley, Dilmah and Twinings are available and are more popular in high-end on-trade establishments. Hindustan Unilever launched Brooke Bond Taaza Thanda, a loose black speciality tea with cooling herbs which is available only in the summer months. Duncans Industries launched economy brand Aaag, Super premium brand Duncans Double Diamond Gold and Duncans Double Diamond green tea bags. Tata Tea sought to extend its communication message from its focused target of housewives to the general public in 2007-2008.

Tata Tea’s ongoing “Jaago Re” (“Wake Up”) campaign was extended to over 200 college campuses in 2008. With its theme of social awakening centred on environmental issues such as saving fuel and water, the campaign was well received. Regional companies, Wagh Bakri and Sapat International, developed brand endorsements by actors Smriti Irani and Sonali Kulkarni in a bid to increase their brand profiles as they sought to move into other regions. Premium, standard and economy brands are differentiated based on price. Twinings is positioned as a premium tea in the country, with the brand priced at a significant premium to other tea brands in India.

The brand is available in select A-class independent grocery stores and supermarkets in cities as well as high-end on-trade establishments. Standard tea brands comprise of mainly national brands such as Tata Tea and the Brooke Bond franchise. Economy brands are mainly from local and regional players, which are priced at a significant discount to standard brands and dominate in the rural areas. Private label brands such as Spring Fresh Tea from Subhiksha Trading Services and More from Aditya Birla Retail have a relatively small presence in India.

Private label held a share of 2% in 2008, with private label brands being the most prominent in the competitively priced loose standard black tea category. A sharp rise in the prices of tea, including low and medium quality varieties, was seen at the national tea auctions in 2008. Packaged tea companies mitigated the price hikes felt by the end consumers by absorbing some of these increased costs and by pushing more affordable smaller pack size products. As vendors of unpackaged tea were unable to absorb the effect of high costs of tea, the gap between the price of unpackaged and packaged tea narrowed.

This caused consumers of unpackaged tea to shift to packaged tea. With the gap in the price of packaged and unpackaged tea reduced, packaged tea was considered to provide more value for money as it is generally known to be of higher quality. Tea grew by 4% in off-trade volume terms in 2008 which is higher than the 3% CAGR witnessed in the review period. The spurt in tea prices in 2008 resulted in the expansion of the consumer base of packaged tea in India. Packaged tea also benefitted from recognition of its consistency in terms of taste and quality.

While the consumption of tea has not increased appreciably over the review period, the packaged tea market has expanded with rising affluence in India. Green tea, which is growing from an extremely small base, experienced the highest growth in 2008. Green tea generated enthusiastic trials from a growing set of health conscious consumers in the affluent urban areas. Targeted marketing such as advertorials in high-end beauty and health magazines and sampling at jogger’s parks is creating awareness of the benefits of green tea.

Premium positioning in high-end retail outlets and combinations of green tea with fruit and herbal flavours are also generating trials. The Kenyan crop failure resulted in higher demand for exported Indian tea resulting in high prices across all varieties at tea auctions in India. Average unit prices soared as price hikes were seen across all brands. The push on smaller pack sizes also inched up unit prices. Tea sold through on-trade channels accounted for 45% of total tea volume sales in India in 2008. The 3% on-trade volume growth seen in 2008 was lower than the off-trade volume growth.

Tea already has a high penetration in the on-trade channel and the off-trade channel saw higher growth as it benefitted from the shift to packaged tea and from the increased penetration of supermarkets, which are able to expose consumers to many brands and varieties of tea. In 2008, independent small grocers accounted for 70% of off-trade tea sales. With increasing organised retail penetration in urban areas, the proportion of sales attributed to supermarkets/hypermarkets has been on the rise throughout the review period and it accounted for 21% of off-trade sales in 2008.

While tea vending is quite popular in the institutional channel, with numerous offices housing vending machines dispensing tea and coffee for their employees, it has a very small presence in the off-trade channel. Branded tea vending machines such as from Lipton are being increasingly located in kiosks, food courts and independent on-trade outlets alongside coffee vending machines. Similar to coffee vending machines, these tea machines are always manned by a vendor who collects money from the customers and then operates the machine to speedily dispense tea.

The demand for fruit/herbal tea is extremely niche in India. Fruit/herbal tea is close to negligible in the country, as consumption of black tea with milk is extremely ingrained in Indian culture. Moreover, as the habit of adding herbs and spices to flavour black is quite pervasive in India, herbal tea has very few takers. The lack of brands and consumer appreciation of fruit/herbal tea resulted in negligible sales of this range in 2008. Sales of unpackaged tea are very common in rural areas. A large number of rural consumers are price sensitive and prefer to purchase cheaper unpackaged tea.

Trade sources estimate that 40% of total tea sales by volume are in the unpackaged form. With the price of unpackaged tea inching closer to packaged tea in 2008, consumers have been moving towards packaged tea recognising that packaged tea offers better value for money. Branded players are focusing on improving the availability and affordability of packaged tea to attract consumers from the unpackaged category. Competition is expected to heat up as malt-based drinks is expected to see heightened product innovation along the lines of targeted brand extensions with specific healthcare benefits similar to Women’s Horlicks.

Product innovation is also going to be fuelled by companies such as Dabur India. This player recently retooled its Chyawan Junior brand for a national launch based on the results of its test marketing. Zydus Cadila is also in the process of developing a new malt-based drink brand. Volume sales of malt-based beverages in India are higher than in any other country in the world. As such, the volume growth rate of other hot drinks is expected to fall over the forecast period, as this range already has a significant penetration in the country. As a result a CAGR of 4% in total volume terms is forecast between 2008 and 2013.

Potential forecast threats to growth of other hot drinks stem from the rising cost of raw materials required to prepare such beverages. The prices of milk have been rising continuously over the latter half of the review period and this trend is expected to continue. Sharp price hikes in the future could threaten the further penetration of malt-based drinks into rural India. Growth in other hot drinks is expected to be driven by malt-based drinks as the consumption of these products is driven by parents’ wishing to buy the best nutritional supplements for their children.

Chocolate-based flavoured powder drinks is expected to see slower growth as there are fewer consumption occasions for these products and they are replaceable by hot drinks such as tea and coffee in the winter months. Unit prices of malt-based drinks are expected to continue rising due to price hikes linked to the rising costs of milk and other agricultural inputs. With the leading brand Horlicks being segmented into variants such as Women’s and Mother’s Horlicks which are priced significantly higher than regular Horlicks, the growing sales of these premium variants is also expected to skew average unit prices upwards.

The off-trade channel is expected to remain the major channel for other hot drinks consumption as the key consumer group, which is made up of children and teenagers, consume the product at home, generally as a part of breakfast and a drink in the evening. Also due to the tropical climate of India, other hot drinks are generally not consumed outside of the home. Moreover the on-trade hot drinks space is dominated by tea and coffee with the growing cafe culture making out-of-home coffee consumption a trendy activity for youngsters. SWOT Analysis Strengths * Capacity for innovation

Tata Tea has a strong reputation for innovation thanks chiefly to significant research and development resources. It showed awareness in exploiting the connection between tea and the robust wellbeing trend. * Financial muscle Tata Tea has a low debt/equity ratio, financial muscle which gives it greater freedom in terms of strategic development. These resources are allowing it to pursue growth on multiple fronts. Weakness * Black tea dependant Tata Tea is over reliant on black tea, in particular black standard tea. Black tea accounts for two thirds of the company’s hot drinks revenue.

As a result it is vulnerable to a downturn in this market area. * Over reliant on mature markets Tata Tea is heavily reliant on mature markets for its hot drinks revenue, particularly so in coffee. The UK, Canada, the US and Australia comprise the vast majority of its presence outside of India. Opportunities * Emerging market expansion Eastern Europe, Latin America and Asia Pacific all hold potential for Tata Tea. It is well positioned in the latter region, although its presence is focused almost entirely in India. * A therapeutic cuppa

Further investment in wellbeing-led portfolio innovation holds potential for Tata Tea as health awareness among consumers is set to continue to rise, with tea well suited to the trend. Threats * Rising competition Tata Tea not only faces fiercer branded competition, but also growing pressure from a strengthening private label segment. Economic downturn will drive further growth in the latter market. * Poor core market outlook The outlook for Tata Tea’s main international markets is underwhelming, with conditions in UK tea expected to be particularly poor as category maturity and waning consumer spending power hit sales.

Marketing Objectives The strategic objectives and challenges of the Tata Tea as gathered from the research are: Global 1. Targeting a better product mix 2. Investing in innovation 3. Developing its global footprint 4. Becoming an integrated beverage company India Centric 5. Consolidating the market position 6. Moving towards creating a egalitarian image In line to the above objective for the next year Tata Tea should following marketing objectives: * To increase the market share by volume by 3% by increasing market penetration * To tap the new market About 33% of the tea market is catered by unpackaged tea, thus this segment represents a very lucrative opportunity to the Tata Tea. We need to develop a marketing strategy that will help Tata Tea in increasing in this market. * To maintain the existing market share in the urban area * To connect with the youth and present a vibrant face among them * Marketing Strategy Target * Tata tea should focus on identifying specific consumer segments which have potential for growth but are as yet untapped. These include: * Rural consumers * Health conscious urban working women * Urban youth and Consumers looking for luxury or indulgence * The company has unexploited rural market. To make Tata tea no. 1 in India, target audience is middle class and upper middle class people in urban areas and unpackaged tea consumers in rural market: * Energetic * Knowledgeable * Responsible * Trendy * Ambitious * Going on the similar lines with Duncans Industries, which in 2008 launched Aaag a low priced tea to target low-end consumers and expanded its distribution reach in rural areas through tie-ups with the postal service? Tata Tea should target target youth, connoisseurs the out-of-home consumers hrough deliberate entry into tea lounges. Targeting rural market: analysis/plan Packaged v/s Unpackaged Tea A sharp rise in the prices of tea, including low and medium quality varieties, was seen at the national tea auctions in 2008. Packaged tea companies mitigated the price hikes felt by the end consumers by absorbing some of these increased costs and by pushing more affordable smaller pack size products. As vendors of unpackaged tea were unable to absorb the effect of high costs of tea, the gap between the price of unpackaged and packaged tea narrowed.

This caused consumers of unpackaged tea to shift to packaged tea. With the gap in the price of packaged and unpackaged tea reduced, packaged tea was considered to provide more value for money as it is generally known to be of higher quality. Rural Market: Rural markets are dominated by unpackaged tea and coffee vendors and the lack of an established distribution network in such areas makes it expensive for packaged hot drinks companies to offer their low margin economy brands to rural consumers. Tata tea should place its efforts on improving its coverage of rural areas.

A great example is like Hindustan Unilever’s rural distribution programme, Shakti, which has helped increase the presence of its tea brands including 3 Roses tea in rural South India. With coffee consumption being much lower than tea consumption in India, company should focus and concentrate on expanding its distribution and market penetration to grow its consumption base. The regional players: As urban volume growth is expected to continue to plateau over the forecast, Tata tea should focus on increasing its rural distribution.

Regional players derive a large proportion of their sales from one or two the main cities located in their region e. g. Mumbai accounts for about 20% of the volume sales of packaged tea players in West India. As the markets in these key cities become increasingly saturated over the forecast period, the movement of regional players onto the national stage is also expected to intensify. Due to their proximity to the markets, regional players are expected to be well positioned to tap rural demand in their own regions for packaged hot drinks.

Hence, Tata tea should leverage its presence across a wider range of FMCG industries to develop multi-pronged strategies for rural penetration. Moreover, Tata Tea has larger resources, regional players are expected to find it difficult to develop a sizeable presence in urban areas outside their home regions. Use of vending machine While tea vending is quite popular in the institutional channel, with numerous offices housing vending machines dispensing tea and coffee for their employees, it has a very small presence in the off-trade channel.

Branded tea vending machines such as from Lipton are being increasingly located in kiosks, food courts and independent on-trade outlets alongside coffee vending machines. Similar to coffee vending machines, these tea machines are always manned by a vendor who collects money from the customers and then operates the machine to speedily dispense tea. Marketing Strategy – Distribution Distribution in rural markets As urban market is approaching saturation, Tata tea should seek to expand its distribution footprint to rural regions.

Although the volume growth in hot drinks was only in moderate single digits in 2008, there is still scope for growth for hot drinks players as there is a large unorganised sector which supplies unpackaged tea and coffee to consumers. Rural markets are dominated by unpackaged tea and coffee vendors and the lack of an established distribution network in such areas makes it expensive for packaged hot drinks companies to offer their low margin economy brands to rural consumers. Tata tea should place its efforts on improving its coverage of rural areas. Distribution in urban markets

In 2008-09, independent small grocers accounted for 70% of off-trade tea sales. With increasing organised retail penetration in urban areas, the proportion of sales attributed to supermarkets/hypermarkets has been on the rise throughout the review period and it accounted for 21% of off-trade sales in 2008-09 Tea is predominantly sold in pouches and folding cartons. In 2008-09, companies dealt with sharp increases in tea prices and high inflation rates in India by promoting smaller pack sizes such as 50g and 100g which are more affordable than 200g or 500g packs. Marketing Action Programs Product

As the part of its product diversification strategy and as a long-term value proposition Tata tea should innovate its own research area to foray aggressively into Indian market with the variants of Tata Tea products like cold brew, green tea, fortified tea and coffee bags. Though the company has entered into the flavoured tea products with flavours like ginger, masala, earl grey, cardamom and lemon, it should also focus on natural flavours (e. g. tulsi). The company should focus on developing research methods for indigenous flavours. This will give the first-mover advantage and will be a USP vis-a-vis other tea manufacturers and tea products.

The company is the market leader in tea bags in UK but has so far felt the heat of local manufacturers and packagers in India. The company as a strategic move should work towards capturing the not-so-tapped market (e. g. railway hawkers, tea stalls) of tea bags in India. Also, in case of corporate, the company should promote this variant of product as it will be more readily accepted given the brand value of Tata. Towards ready-to-use product variant in tea market, the company should research on producing a tea-capsule (or tea-cube), which once added in milk or water gets dissolved just like the powdered tea in tea bags.

Company also needs to have some products in lower price range to penetrate in the market that is owned by unpackaged tea. In recent past the company has launched tea brands like Agni that cater to the rural population. Further, the product needs to be of the highest quality as the survey suggests that the Taste is the most important factor on which the people judge the tea. The parameters like aroma don’t make any significance presence but price is considered by many. Here the people who shops in the malls may not be that price sensitive where as the rural customer sure going to be. Price

Tata tea’s main market is northern India where the median price for a 250-gm pack is approximately Rs 42. 50. Given the purchasing power of people in Indian subcontinent and average market selling price of Rs. 145 per kilogram of tea the company should focus on low cost variant of tea. In rural areas, the frequency of tea drinking is pretty high which means the consumption of tea is more (as per volume). But at the same time this need is catered by the local players in the region. Now, since the company is already targeting rural market in its advertisement campaign the company should reduce its prices especially in those areas.

Promotion The general perception of people in India about Tata Tea is that of the costly tea product. Tata tea should use the tea farmers of that region or the below poverty line people towards changing the image of highly priced product. New Jaago Re Campaign Post pro-voting campaign called Jaago Re, Tata Tea should launch the new Jaago Re campaigns addressing other social messages like saying no to child labour or bribes. One such recently launched campaign is latest on promotion – New Jaago Re Campaign. Tata Tea launched the new Jaago Re campaign – ‘Aaj Se Khilana Bandh, Pilana Shuru’.

The new campaign takes up yet another relevant social issue – Corruption – and urges the citizens of the country to awaken and fight against it. The campaign aims at not just creating awareness about corruption but communicating to the people that ‘You should be the change you seek’. In order to enter into rural market with a greater coverage the company should put the promotional campaigns in place. For e. g. delivering the small packets/sachets of tea with newspapers at each home. Doing this the rural population will be able to judge the returns after spending for Tata tea.

While promoting Tetley-tea-bags in rural market can also be a success if the population is made aware of minimal use of cooking gas, easy in use of Tata tea bags and the instant tea option. Further, Tata tea should start promoting itself as a beverage company rather than just a tea producer. Place Rural Expansion Plan Tata Tea should capture the rural market firstly by changing the brand image of its. Given the majority of tea drinking population placed in rural India and majority of local players serving this chunk, the company should spread its operations in rural areas. The rural market will also be tapped using the direct marketing.

Rural Indian market consists of a lot of potential and this potential can be only tapped when a system is developed that understands the intricacies of the system itself. On village level a gram-sachetak will be hired that will have two purposes. One he will help Tata Tea in expanding the egalitarian thoughts and second will give an opportunity to Tata Tea to capture the untapped market by showcasing their presence. Further, the working of these Gram-Ascetics will be governed by a supervisor that will operate at cluster level and will have about 10 -12 gram-sachetak under him.

The supervisor will also be responsible for the distribution of goods from a wholesaler to the gram sachetak. These people will be working on the basis of commission on sales, thus there will be an added incentives for the salesman to perform. Further, we will add vans and buses that will do direct marketing for Tata Tea. Global Expansion Plan At present, Tata Tea, which owns assets including the UK’s Tetley Tea, has a global market share of around 20% across the category as a whole.

India currently delivers around 25% of its revenues, while the UK and US are also responsible for a similar proportion of value sales on an annual basis Unilever, the owner of Lipton and PG Tips, is its major competitor in this sector, and Tata Tea is looking not only to take on the FMCG giant, but also to form partnerships and possibly make further acquisitions. Tata tea should move from being purely a tea business to a beverages business. Tata Tea’s stable of products currently includes coffee and energy drinks, as well as Himalayan, a bottled water brand available in India.

The company should expand its operations into smoothies, fruit juices and “functional drinks” in the global and local market to compete at much bigger scale. The company should focus more on the expansion of its global distribution strategy in the Middle East, South America, South Africa and the Commonwealth of Independent States including Russia. Implementation The marketing communication plan * Advertising * Sales Promotion * Public Relations * Media: * TV * Print * POP/POS * Banners The Marketing Background Worksheet S. no. | Key Considerations| Questions| 1| Product description| Packaged tea| | Market assessment| in FMCG market with local players and HUL| 3| Sources of Business| from packaged tea market| 4| Competitive evaluation| Usages, tastes and loyalty| 5| Marketing Objective| Achieve market and thought leadership for branded tea in India| 6| Marketing communication| The jaago re campaign, a holistic 360 degree advertising campaign using the unique route of social awakening| The Key Target Audience Worksheet The urban market: * Since, it is a FMCG product, the sales of the product will come from middle class and upper middle class households, primarily * Marketing objective require trail and continued uses.

For that we can choose POP marketing and small packs distribution through magazines and other mediums. * Decision makers are housewives The Decision Grid Target audience| Role | Consumer | Trade| Initiator| Ads, Displays| Demand, customers| Influencer| Retailers| promotions and margins| Decider| House wives| owner| Purchaser| House wives| owner| User| Family| customer| The Communication Strategy Worksheet: * Communication objective: * Brand value creation * Communicating the Value Proposition * Social Awakening * Brand attitude strategy * Want people to do after communication: * Buy, re-buy more * Perceive Tata tea as no. brand * Awake socially Financial requirements: Tata Tea| Financial projections and budgeting sheet| Last Year’s revenues:|  | 4874. 1| Total market size:|  | 20140| Total market share of unpackaged tea:| 33%| 6646| Target market share of this segment:| 3%| 604. 2| Derived marketing expenses:| 14%| 84. 588| Expenses in TV advertisements| 30%| 25. 3764| Print media| 25%| 21. 147| Mobile vans| 8%| 6. 3441| Banners/Hoardings| 10%| 8. 4588| Free distributions| 8%| 6. 3441| Direct selling| 20%| 16. 9176| The market will increase with the 3% growth rate and if we are expecting a growth of 3% in market share of the Tata Tea.

There will be an increase of about 600 crores in the revenues of the Tata Tea. Comparing the figures with the historical data, we get that Tata Tea invests about 145 of their revenues in the for the sales and marketing purposes. The figure comes out to be near about 8 Crores. This 84 crore will be further divided into the arious marketing means. The division has been done in the basis of the data available and calculations. The penetration of various advertising means has been taken into account while dividing the sources. Television has a penetration of about 24% in the Indian rural market and that is followed by radio.

As about the 24% of the population is density Financial data shown here represents the * These 4000 odd representatives will be trained and sent to rural areas * They will have the responsibility of selling directly the cheapest offering of our product, Tata Agni to the consumers of unpackaged tea * A strategic tie up with a local/regional tea producer distributer will be targeted for initial logistics support through offerings out of the budget from the direct selling expense * The regional direct selling expedition will be divided across different regions viz.

East, West, North, South Amount available for direct selling|  | 16. 9176 (in Rs. Crores)| Lump sum salary expenditures possible|  | 16. 9176 (in Rs. Crores)| Salary per sales representative|  | 3500| Total no. of sales representatives hired|  | 4028| Forecasts and Targets The tea industry is expected to see renewed consumer interest as tea companies and the Tea Board of India will strive to draw attention to this category.

The efforts of our company targeting the youth with flavoured/functional teas, tea lounges, tea tourism and social awareness campaigns is expected to draw consumer attention to the product over the forecast period. The efforts to expand our rural coverage and capture unpackaged tea consumers are also expected to cast the spotlight on sales in general throughout India. A review period CAGR of off-trade volume growth was marginally higher than the CAGR of 3% forecasted. Given that the penetration of tea in India is fairly high, volume growth is expected to fall year-on-year during the forecast period.

An off-trade value CAGR of 4% is predicted as consumers are expected to trade up to higher quality teas and experiment with speciality and green teas in the forecast period. Customer Survey (Appendix) Analyzing the results obtained from the group study and the survey conducted and following graphs are plotted Consumers from different age groups prefer the beverages (values in % terms) The consumers start with specific brands and taste and as the consumers mature they become more health conscious and prefer health drinks in their diet and move towards juices and shakes.

Tea is more preferred than the Coffee, according to survey across all the age groups. So it can be concluded from the analysis of the survey and study that the Tea market is more challenged by the health drinks than the conventional threat coffee. How often consumers try other products/brands (All values in % terms) The survey also suggests that the as the age matures consumers are more ready to try new brands and products and after establishing their taste and brand consumers than don’t easily move from their product and brand.

Consumer acceptance and awareness of different Tea brands across all age groups (All values in % terms) The graph shows the acceptance and awareness of the different Tea Brands among different age groups. As can be seen that TATA Tea and Brooke Bond are the two most accepted Tea Brands among all age groups, where Brooke bond is leading the TATA Tea with small margin. With all the data it can be said that the Tea as a product has threat form health drinks such as shakes, juices.

Consumers across all age groups prefer health drinks more than Tea. Also Tea is more preferred than coffee across all age groups. The consumers across all age groups have strong brand perception of TATA Tea and perceive it as superior quality product. Now the consumer needs are more dynamic and they prefer quality over the established goods and are more likely to experiment more. The product with continuous innovation and meeting customer expectation in the long run can be established Recommendations Since customers are more health conscious, TATA tea should promote tea as equally healthy drink as other drinks * The Brand is already established and TATA Tea is perceived as the best quality product, different variants of the Tea should be introduced highlighting more on the hygiene, added vitamins 1. TATA Tea has Brooke Bond as the main competitor in Tea market, company should improve the taste as compared to Brooke Bond. The consumers as found in survey rate taste very high while selecting the drink


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