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

Company: Tapal Tea (Pvt) Limited

Company Website: www.tapal.com.pk

Other Sources Used: Tapal’s website, Press releases and other various websites

Company’s Motto: “Never Compromise on Quality”

Company’s Popular Slogan: “Tapal Makes Tea-Time Terrific”

Tapal Tea is the no.1 tea selling company in Pakistan and is a private entity. The

company has been able to instill creativity in its media advertisements which shows

that it has typically understood the nation’s perception of tea. The company’s arch rival

being Lipton Tea, a division of the multinational Unilever. Tapal has built its customer

loyalty over the years through what they consider a confident and stable marketing

strategy. “Tapal was started as a family business in the year 1947. Today the company

is proud of being the largest, 100% Pakistani owned Tea Company in the country.”

(http://www.tapal.com.pk )

For confidentiality purposes, detailed strategies have not been discussed in this report.

However, a fair idea of the approach the company has taken up will be discussed in this

report. The company follows a flexible marketing strategy similar to others that are

faced with a fierce competition. It has eight different brands of tea and implements a

different marketing strategy for each of them. Classifying the products on a BCG matrix

helps in presenting a better picture about each product. This approach serves as a

method of understanding the company’s better performing brands in the market.

The company’s products have been charted-out in the diagram below:

RELATIVE MARKET SHARE

High Low

MARKET GROWTH RATE

High

Low

Stars

Tapal DanedarTapal Family Mixture

Question Marks

Tapal MezbanTapal Gulbahar Green Tea

Cash Cows

Tapal ChenakTapal Tezdum

Dogs

Tapal SafariTapal Jasmine

Tapal Danedar and Tapal Family Mixture are considered as the ‘golden brands’.

Tapal Tea is credited to be the first company to introduce the ‘Danedar’ brand. This

type of tea is slightly different and better in taste and gained so much popularity that

other companies imitated this product and came up with a similar brand of their own.

Tapal Gulbahar Green Tea has good future prospects. It is one of its kind and there is

a possibility of shifting to the ‘Stars’ category.

Tapal Safari and Tapal Jasmine have not yet produced as much revenue as their

fellow brands, the reason being insufficient advertising.

Tapal Chenak and Tapal Tezdum have found more popularity in the rural areas of

interior Sindh, Pakistan. It can be observed through the products’ advertisements that

the target market was well thought out.

The various brands give Tapal Tea an edge over Unilever’s Lipton Tea. Lipton Tea has

only three brands of tea in Pakistan whereas Tapal Tea has eight of them. These entire

eight brands have introduced a unique taste of their own. Therefore, Tapal Tea

provides its consumers with ‘variety’ which comes as an important factor in any

business being carried out.

MARKETING STRATEGY MODEL

The company is consistent with its marketing strategy model. For all brands, new and

old, it adopts the rational model of formulating a marketing strategy. This provides a

systematic way of defining the purpose and attaches a value to the strategy.

Mission &      Objectives      

  Environmental  Scanning

Strategy    Formulation     

Strategy Implementation  

      Evaluation      & Control

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

The rational model assists in defining and taking account of all various variables that

cast an impact on the organization’s strategy. For example, the “Environmental

Scanning is concerned with an internal analysis of the organization (‘SWOT’ analysis)

along with an analysis of external macro environmental factors (‘PEST’ analysis).”

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

During the Strategy Formulation, it is made sure that all objectives of the strategy are

consistent with the objectives of the organization as a whole.

A very general corporate appraisal of the entity using the ‘SWOT’ Analysis is presented

below:

SWOT Analysis

Strengths:

High market share Higher brand image Addresses the varying demands of differing tastes Good relationship with suppliers The only private tea company in Pakistan involved in export ‘Innovators’ of the famous Danedar brand Makes good use of technological advances High quality is maintained throughout

Weaknesses:

Market follower approach is a defensive tactic compared to its aggressive marketing strategy

Product placement may well be a problem since the company is a private company

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

Opportunities:

Exports Expansion in the international market Sri Lankan and Indian market could be explored further Upgrading to a multinational status from a private company could lead to more

financial sources being available Wide base of human resource available

Threats:

WTO impact may open doors for new entrants Lipton Tea’s highly geared marketing strategies Entrance of the international brand ‘Tetley’ into the market Its aggressive marketing policies might force competitors to adopt aggressive

tactics in their defense

IMPACT OF BUDGETING ON MARKETING STRATEGY

Budgets are allocated over a one year term. The task of drawing up a budget is assisted

by a sub-department of the Marketing department called the Marketing Research

Department which provides them with future sales trends. “Tapal subscribes to and

conducts various researches in the area of retail audits, consumer behavior, media

planning and product development. This research is used for continuous improvement in

product quality, brand positioning and communication according to the changing

requirements of the consumer.”

(http://www.tapaltea.com.pk)

Budget allocation is conducted on grounds of experience and future market trends

identified by the company’s research department. Assumptions regarding future

market trends are well-calculated and thoroughly analyzed by senior managers.

The company’s accounts that show a special ‘child’ account in the ‘parent’ account of

Sales Promotion. This sub account comes under the name of ‘Attack Plan’ and its

details include – ‘costs incurred for massive ad-hoc advertising campaign’ . This shows

that the company is prepared to counter-attack any new marketing campaigns

introduced by its competitors. It also shows that the company takes these as a major

threat and retains enough funds to backup a technically sound contingent marketing

plan. The company acknowledges the importance of marketing and relies heavily on it.

It doesn’t find the need to draft a strategy annually and seems confident with its

marketing strategy.

The life span of the marketing strategy is 3-5 years and ‘logical incrementalism’ seems

to have been followed by the company as it involves small scale extensions of past

practices. Thus, every time a new strategy is devised, it is an extension of the old one

shaped up according to the changing circumstances.

The Marketing Department doesn’t seem to be fond of entertaining brand new

marketing ideas. This is because in such a competitive milieu, the company is afraid to

lose its stability.

THE MAIN INGREDIENT OF MARKETING STRATEGY & HOW IT PROVIDES COMPETITIVE ADVANTAGE TO TAPAL TEA

The company faces severe competition from the Unilever tea brand Lipton Tea, which

forces it to adopt a value based pricing strategy.

“Value-based pricing is a method of pricing products in which companies first try to

determine how much the products are worth to their customers. The goal is to avoid

setting prices that are either too high for customers or lower than they would be willing

to pay if they knew what kind of benefits they could get by using a product.”

(http://www.computerworld.com/news/2000/story/0,11280,42848,00.html )

From the various techniques that Tapal Tea can use to facilitate itself with value-based

pricing, a Value Chain Analysis (Michael Porter) is conducted to help locate which

processes add value to the product and which ones don’t. The picture below is a

demonstration of Value Chain Analysis which is discussed further;

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

“To analyze the specific activities through which firms can create a competitive

advantage, it is useful to model the firm as a chain of value-creating activities. The goal

of these activities is to create value that exceeds the cost of providing the product or

service, thus generating a profit margin.”

(http://www.quickmba.com/strategy/value-chain/ )

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

hard to understand how the consumers ‘value’ its products and thus, how much they’re

willing to pay for it.

MARKETING MIX

Obviously, a different marketing mix for each brand is being followed by Tapal Tea. A

very general marketing mix has been drafted taking the whole company into

consideration. However, the marketing mix for Tapal Chenak has been provided in this

report for a better understanding.

Marketing Mix for the whole company Marketing mix for Tapal Chenak

Product: TeaPrice: Lower income (Value- Based Pricing Strategy)Place: Distribution networks

Across PakistanPromotion: Culture-based

Product: Dust TeaPrice: Lower income (Value-

Based Pricing Strategy)Place: Interior of Sindh

InfrastructurePromotion: Culture-based

KEY SUCCESS FACTORS

PRODUCT:

Creation of a Brand Name has helped Tapal become the most prestigious tea brands in

Pakistan. The company has long passed the Introduction Stage in the Product Life

Cycle and has been operating at the Growth Stage and delaying Maturity by offering

new products every now and then. This gives the company a definite edge over other

tea companies.

Quality of Packaging also counts as an important factor in creating a value of the

product in the customer’s eyes. The color scheming used in its packaging is different

and unique from other tea companies and Tapal Tea has always been consistent with it.

The quality of paper used in the packing keeps the tea crisp and fresh for the customer.

Styling and font used by Tapal Tea brands also makes its products stand out. Tapal

should however, still be credited for using a good color contrast with all brands’

packaging.

PRICE:

The company adopts Value-based pricing as its Pricing Strategy. It knows exactly at

which level the market will accept a price and comprehends how exactly its consumers

‘value its product’.

Tapal Tea sells its products to resellers at a higher retail markup than Lipton Tea. Due

to this factor, retailers are themselves interested more in selling Tapal Tea to

consumers. This is a vital part of the company’s marketing strategy. When compared

with Lipton Tea, retailers are expected to sell large quantities of Lipton Tea to

compensate for the low markup. It sells most of its brands at a fixed retail price all

over Pakistan.

Tapal adopts Seasonal Pricing to stabilize its earnings and sales throughout the year.

This itself does not provide competitive advantage in a proper context, but helps in

soothing out the earnings and sales.

PLACE:

Tapal has developed fast and hassle free Distribution Channels of its own. It does not

share its distribution channels with any other entity. Lipton Tea for instance, has seven

distribution channels, and every single one of them is commission based and not

owned by Lipton Tea.

Tapal has a wide Market Coverage ranging from UAE to USA. Internationally, Tapal

faces immense competition from Lipton (Unilever) and various other tea brands.

However, on a national scale, Tapal still enjoys being the favorite undisputed tea selling

company.

The company has its own Transportation and means of delivering stock.

Inventory Management is also in-house. All inventory information systems are up to

date with the latest technological developments available in Pakistan.

PROMOTION:

A great deal of money is spent on Advertising. The company considers mass media

advertisement as its way of ‘communicating with the masses’.

Public relations and Publicity have always been sound for Tapal since the very

beginning. The company is proud of its reputation of being a 100% owned private

Pakistani company.

HOW THE CURRENT MARKETING STRATEGY RAISES BARRIERS TO ENTRY

The mass media advertisements on cable television make Tapal Tea look extremely

strong. Despite being a private entity it spends heavily on advertising. Hence, any new

entrant will for sure be intimidated by Tapal Tea’s advertisements and its level of

spending on advertising. It has set the benchmark for new entrants ‘too high’ for them

reach. Thus in order to establish themselves, the new entrants either end up spending

more than required or get daunted by the idea of a huge spending on advertising.

Various other marketing campaigns and schemes over the years have helped Tapal

create a good brand image and strong customer loyalty. For example, the current

marketing strategy also included free sampling of its new brands in the interior of

Sindh (this was the ‘place’ targeted for promotion of new brands). Tapal Tea’s frequent

marketing campaigns have made it a popular company and along with its sound

financial history, it has developed a strong bargaining power over its suppliers.

OTHER FACTORS RELEVANT TO THE MARKETING STRATEGY

Tapal Tea enjoys its reputation of being the innovators of the ‘Danedar’ brand. Other

companies have also imitated this brand but the psychological impact that the

organization has left on the people (of being the first to do so) has established a unique

brand loyalty amongst the consumers. “A brand's name is perhaps the most important

factor affecting perceptions of it. In the past, before there was a wide range of brands

available, a company could name a product just about anything. These days, however, it is

necessary to have a memorable name that conjures up images that help to position the

product.”

(http://www.quickmba.com/marketing/ries-trout/positioning/ )

The company undertakes a lifecycle analysis of its tea brands. This is critically related

to the marketing approach for a specific brand and thus, directly related to the

marketing budget allocated to it. It has a brand-specific marketing strategy and each

brand undergoes a rigorous analysis before its marketing strategy is drawn up.

However, the company remains consistent with its approach of formulating a strategy

(i.e. applying the rational model). By doing this, the organization makes sure that all

objectives are clearly communicated and the purpose of the strategy is consistent with

that of the whole organization to achieve goal congruence.

The profits have increased since the marketing strategy was implemented. However, it

should be noted that this trend has continued over the history of the entity and the

steady increase in profits might not always have much to do with the current marketing

strategy. The marketing department is appraised every three months. Sales and profits

are the measures against which the appraisal is carried out. This again shows that the

appraisal might not actually be worth the time it takes. The company should also find

other yardsticks against which it should appraise its marketing department. Such

yardsticks can definitely be non financial measures.

The following figure shows sales in kg tons of Tapal Tea compared with Unilever’s

Lipton Tea for four years;

2004 2003 2002 20010.00

5.00

10.00

15.00

20.00

25.00

30.00

35.00

Tapal

Lipton

Tapal Tea offers retail markup of at least Rs.3 on all its brands to retailers, which is

more than twice what Lipton Tea offers (i.e. Rs.1.40). Price offered to consumers and

retailers has always been a vital tactic of the marketing strategy of Tapal Tea. The

company enjoys a fair lead over its most daunting opposition. The ‘aggressive

marketing strategy’ is the reason why Tapal Tea has become the most dominant tea

company in Pakistan.

RECENT MARKETING CAMPAIGNS

Tapal Tea is always coming up with different ideas to counter attack its competitors

marketing campaigns. It should be noted though, that hardly any of these plans are ad-

hoc. Tapal Tea remains consistent with its marketing strategy and this shows how much

faith the company has in its existing strategies.

Recently, Tapal Tea launched its own program on local radio by the name Tea Time.

Apart from that, various other schemes are also in place which offer discounts to

consumers. Another scheme which now has expired, offered free tea bags with three

large packs of Tapal Tea.

At a recent event, Tapal Tea was offering free samples of tea. There is hardly any time

of the year when Tapal Tea is not seen on the billboards. The marketing department

seems to be exceptionally active and prepared throughout.

RECENT ACTIVITIES OF THE ORGANISATION

Tapal has just recently started exporting tea to Italy. The company places great

confidence and faith in its research activities. All statistics and figures required to move

ahead with a strategic plan are provided by the Marketing Department. The company

exploits current opportunities and plans accordingly for the future with the help of its

Research Department. The performance of this department is hence to an extent

directly related to the successful marketing strategies.

According to the data gathered, the company does not have any special activities lined

up apart from its never ending marketing campaigns. But it should be noted that

sponsoring musical evenings and live concerts are a part of the entity’s public

relations activities. Only recently, on the occasion of Eid in Pakistan, Tapal Tea

organized three musical events which were shown on a popular cable television

channel on all three days of Eid. The organization currently has a lot of celebrities

working as Brand Ambassadors.

CONCLUSION

Tapal Tea’s marketing strategy formulation has its own pros and cons. In technical

terms, budget allocation is considered as a ‘tactic’ which is used to attain an objective

as set by the marketing strategy. The company allocates budget to a marketing strategy

on an annual basis. The company is always ready to slightly alter its strategy at a given

point in time to counter attack its rival’s marketing campaigns. A formal rational model

helps to clearly identify objectives and takes into account all the elements that might

influence its strategy.

If considered in a larger context, Tapal Tea takes nearly all possible steps to maintain

its market share. The entity considers marketing as a strategic weapon. Its marketing

policies and tactics have always been aggressive.

The strategy formulation is re-drafted after every 3-5 years. And the company utilizes

the rational model of strategy making. Using the rational model for marketing strategy

is believed to be too time consuming. It takes into account various factors that remain

constant over a long period of time. People are afraid to question once such a strategy

is implemented because of the time and effort put in it. And above all, the rational

model is used when a strategy is being implemented from scratch. However, the

strategy making process also depends on the various other factors such as the

organization’s age, structure and internal politics.

Also by refusing to accept new ideas to infuse in the marketing strategy, the top level

manager might just be de-motivating the employees and might be discouraging

initiative. Sometimes employees have a direct contact with consumers and are able to

get a better feedback from consumers than senior managers. Therefore, creativity

should be encouraged as Tapal can afford to experiment.

Another interesting thing that should be noted is that the marketing department is

appraised every three months. Such a short term appraisal sometimes becomes more

of a routine procedure just to fulfill the formality of performing a task. Compared to

the life span of the strategy, the time interval between appraisals is just too short. A

massive marketing campaign might not even produce meaningful results to examine in

such a short time period.

Although, the company has introduced at least two new brands of tea lately, it has not

altered its basic pricing strategy for the new brands, i.e. value-based pricing. A

different pricing strategy such as market penetration could be tried out. Tapal enjoys a

fair lead over its rival Lipton Tea.

Tapal Tea’s history reveals that the company tried out market penetration to out stead

the then favorite Lipton Tea. Perhaps, the entity has gained such a great proportion of

the market that now they believe value based pricing is better in today’s market. It

should also be noted that the company has not diversified into other businesses like its

competitor. Lipton Tea is one of the several hundred divisions of the multinational

company, Unilever.

Tapal Tea considers ‘innovation’ as the key factor behind its success. An excerpt taken

from the company’s own website provides shows various areas in which it has excelled

because of innovation:

“Always on the move, Tapal Tea is honored to have taken the lead in a number of areas in the

tea industry. Tapal has been:

• The first to introduce soft packs in the country.

• The first tea company to introduce metal-free tea bags.

• The first to develop an entirely new blend and category-Tapal Family Mixture (the mixture

of leaf & dust).

• The first to invent the highly successful brand Danedar Leaf Blend.

• The first to market Kenya teas in Pakistan.

• The first tea company to be awarded the ISO 9001/2000 Quality Certification”

(http://www.tapaltea.com/saga_of_success.htm)

When examined from a bird’s eye view, the marketing strategy of Tapal Tea serves just

right for a privately owned company. But it should be noted, Tapal Tea’s methods of

evaluating its marketing strategy fails to serve the rationale behind the appraisal. This

might again be because the company might be satisfied with how things are currently

going as it is enjoying an era of Market Leadership.