nong cha final.docx

8/14/2019 nong cha final.docx

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Executive Summary

The following marketing plan forms the basis for the introduction of an innovative new

product by the Nepal Tea House Company. The analysis allows us to outline the best

strategies to follow for the achievement of the companys strategic goals. Nong Cha

will be marketed as a unique functional drink while striving to reinforce the companys

status as the leader in innovation and successful product launches.

For the last decade, the health benefits of tea have gained wide coverage in the media.

Studies continue to show the beneficial properties of teas, with health benefits ranging

from lower cholesterol levels to improve arterial health and decreasing chance of

cancer. This positive press has definitely catapulted the demand for tea.

In 2009, the tea industry reached the $17 billion category and it is expected to

continue growing indefinitely. Market analysts believe the tea industry will continue

to boom and is not expected to reach saturation level in the near future. The favorable

movement in the tea industry can be attributed to two major factors: a) consumers

need for convenience and time-saving services; and b) the positive press given to tea.

Success will be reflected by a sizeable capture of market shares within world tea market,

while strategically carrying the company up to the top spot as the market leader in the

functional drinks segment of green tea. Export potential will be considered in major tea

market like China, Japan, South Korea, USA, and European Countries.


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1.IntroductionNong Cha Tea is made from fresh green tea leaves, produced on one of the most modern

production line in Asia, with four options for different taste: no sugar, honey, lemon and

winter melon green tea is becoming a popular drink of Nepalese people. Tea is a popularand traditional drink of people. That has brought a great advantage for the development

of Nong Cha Tea when it jumped into the market. Nong Cha Tea is distilled from fresh

tea to reserve the original flavor of green tea leaves; bottled in PET, Can and glass bottle

(in the near future), which are very suitable for the modern life. Healthiness and

convenience are what Nong Cha Tea promises to bring to customers. Manufacturing

process of Nong Cha Tea is not so complicated. However, modern production line is used

to produce the bottled tea product, which has high quality with wonderful flavors and

meet the food safety standards. Nong Cha Tea also has to compete with other drinks in

beverage domain, such as Pepsi, Coca- cola, etc.

After Nepal becoming an official member of WTO, Nong Cha may face a big challenge

in future from the high competitiveness of more imported ready-to-drink tea products.

This marketing plan is going to implement main strategies to maintain the products

leading position in Nepal as well as in rest of the world and prepare for its market

development.

Product:

- Beauty products are also included.

- Create new flavors for different tastes of customers; take the innovation in the package.

Promotion: It plays a vital role in the success of Nong Cha and invest a lot of amount in

promotional activities.

- Continue launching advertising activities on TV, newspapers, magazines and the

Internet.

- Have specific strategies to encourage the purchasing power through sale promotion

(sample, discounts, etc.)

- Invest more in PR, be a sponsor of big competitions.


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Finally, Action Plan and Budget and Control Program parts will illustrate specific

plans to support for the marketing strategies for Nong Cha as mentioned.

2. Situational Analysis

2.1 Market Share Analysis

Currently, Nong Cha occupies more than a half of the ready-to-drink tea market in Nepal.

It significantly increased by 190% from 12/2012 to 12/2013. After successful operation

in Nepal, we are planning to expand our Nong Cha business in worldwide through

exporting our product to different countries, especially in Europe and America.

2.2 Market Analysis

2.2.1 Macro-Environment

PoliticalDue to the unstable political environment in Nepal, Nong Cha does not gain many

benefits when operating its business. Moreover, with tea products, the

Government tends to provide some kinds of subsidies to maintain the balance of

payments. However, Nong Cha has to follow strict legislations, which are

changing overtime; the change in tariffs, for example, may have a negative effect

on the sales of Nong Cha.

EconomicalThe purchasing power of consumers also rising somehow in all countries. They

are now willing to buy and try new products, especially if these ones are good for

their health. However, due to high inflation rate, which leads to general price

rising, Nepal Tea House has to calculate the cost of goods sold effectively to

maintain its profit margin.

CulturalTea is a popular and traditional drink of Nepalese people. That has brought a great

advantage for the development of Nong Cha when it jumped into the market.

DemographicalAs Nepal being a young nation, the kind of convenience products like Nong Cha


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is suitable for a dynamic population. However we are targeting our product in the

world tea market.

Nevertheless, not almost all the youth like drinking tea as previous generations. They

are absorbing culture and drinking habit from other countries and interested incoffee, packed fruit juice or soft drink.

NaturalNepal is located in tropical monsoon region - the land of tea plants. A huge

rainwater amount of 1,700-2,000 mm/y, Summer and late spring temperatures

range from 28C (83F) in the hill regions to more than 40C (104F) in the Terai

whereas In winter, average maximum and minimum temperatures in the Terai

range from a brisk 7C (45F) to a mild 23C (74F)., humidity at 80-85%, fatschist and basalt land available, all support for the growth of tea plants. The

source of raw material is therefore very rich.

TechnologyTechnological Manufacturing process of Nong Cha is not so complicated.

However, modern production line is used to produce the bottled tea product,

which has high quality with wonderful flavors and meet the food safety standards.

2.2.2 Micro-Environment

CustomersNong Cha is adopted by many layers of the population. The old may try it

sometimes instead of making green tea. The youth prefer a ready-to-drink tea,

which is convenient for their dynamic life. This product is also more popular

among children, as a substitution for other soft drinks like Pepsi, Coca, etc.

SuppliersNepal Tea House takes the source for Nong Cha from villages or local teaplanting entities. It can be seen as a favorable condition for Nepal Tea House

because of the cheap human resources and rich raw material source.

CompetitorsIn the tea domain, Nong Cha has to face several big competitors. Nong Cha has to

compete with other drinks as Pepsi, Coca, etc.


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IntermediariesTo increase sales, Nepal Tea House builds up large distribution networks; deal out

Nong Cha to supermarkets, retailers and outlets, especially in big cities, which

consume a large amount of this product.

2.3 SWOT Analysis

a) Strengths Take the prominent feature in the drinking habit of Nepalese as well as in

abroad people.

Being a product of NEPAL TEA HOUSE, it has a reputation for its Healthcare products.

With various nutritional facts included, Nong Cha brings practical benefits topeoples health. (Japanese researchers conclude green tea is a healthy

beverage, and drinking it every day helps reduce the risk of death from cancer

and cardiovascular diseases.)

Adopted by large layers of population. Have larger product options than other competitors. Have a large distribution networks all over the country. Take the advantages from being sponsored by Focusing on brand name,

existing distribution networks.

Produced on one of the most modern production line in Asia.

b) Weaknesses Raw material source supplied depends on many factors, such as labor disputes,

strikes, weather, natural disasters, increasing in fertilizer price, etc.

Has higher price in comparison with the domestic same kind of product. Has not developed any new flavor within the last 1 year in the tea market. Entrance into difficult non-core categories.

c) Opportunities New product introduction.


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Young population prefer for green tea when penetrating and developing themarket.

The living standard is increasing very sharply reflecting increase in sales. The tourism in Nepal is developing, that is a good chances to introduce new

product to foreigners enlarge the market for Nong Cha abroad in the near future.

d) Threats Compete with more rivals, especially reputed brands in tea market. Potential health issues. Free trade. High inflation rate threatens the products development directly whenit causes a

considerable increase in production cost.

3. Marketing Opportunities

The result of our past trend indicates that Nong Cha has tapped into a market opportunity.

As per our last years strategic planning we thought of spending several years building up

a strong presence in a local market before expanding internationally. We have now

chosen to grow in a more aggressive manner for these reasons:

Niche market- We have created a new green tea category and are currently theonly company with this category.

Compelling brand image and story- The packaging, presentation and profile ofthe Nong Cha brand fit together extremely well with the product. The packaging

is done focusing on the people with a busy life style. It is a ready to drink product.

It is also a brand and a story, which has successfully gained free media coverage,

and should continue to do so.

Management Team - We have developed a team with the right combination ofsales experience and market creativity who are capable of growing the company

on a national and international level.

3.1 Beyond Snapple - The Emerging Market for Quality Tea

We have identified four market trends that are fueling demand for Nong Cha within the


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$72 billion non-alcoholic liquid refreshment beverage market.

3.2 Explosive growth in Ready-to-Drink (RTD) tea and bottled water markets --

Although carbonated soft drinks still dominate the beverage market, in the past ten

years people are now more concerned about their health. These carbonated drink are

unhealthy and can cause various diseases. But Nong Cha is the product that can

substitute the soft drink which is a healthy drink and can cure many diseases like

cancer, heart diseases, gastritis and is also good for skin.

3.3 Beyond the tea bag -- The emergence of tea culture- Snapple and similar brands

helped make tea accessible to a broader population. But now in the same way that

gourmet coffees have become popular, consumers are beginning to develop an

appreciation for finer teas. Over the last six years the U.S. sales of leaf tea have decreased

more than double, from $1.8 billion in 1990 to $4.2 billion in 1996. According to the Tea

Council, there are over a thousand tea houses or tea parlors in the country, mostly opened

within the last two or three years. These parlors focus almost exclusively on tea, products

that go with tea as well as tea hardware.

In addition to the burgeoning of tea cafes, tea culture is spreading in the form of tea

magazines, tea-flavored ice cream, frozen tea ice bars, tea-scented perfume and bubble

bath, tea jelly, tea calendars and even books about tea.

3.4 The natural foods boom- The natural product category has also exploded in the

past 6 years. Fueled by an increase in health consciousness and rising environmental


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awareness, people demand for the product that are beneficial for the health. According

to Natural Foods Merchandiser, the natural products industry has nearly tripled in size

since 1990 from $4.2 billion to $11.5 billion in 1996. And the boom is expected to

continue well into the next decade. Green Tea Market is forecasted 15-20 percent

annual growth over the next three to five years, reaching $50 billion by 2013.

3.5 Rise of Cultural Creative - Market research in the past three years has

identified a consumer mindset which would seem to be particularly receptive to

Nong Cha. A 2006 study by the market research firm American LIVES identified a

subset of the population, roughly 44 million Americans, which they labeled

"Cultural Creative". Among the key characteristics and values identified for this

group, the following are likely to be the ideal customers for Nong Cha:

Experiential consumers - they want to know where a product came from,how it was made, and who made it.

Holistic - they view nature as sacred; they form the core market foralternative health care and natural foods.

Desire for authenticity- favoring high integrity over high fashion.4. Objective Statement

The objectives of the marketing plan are strategically centered around 3 criteria: to create

a strong consumer awareness towards a completely new green tea product from

Himalayan Tea House, to establish a wide brand recognition through the capture of

market shares in the functional drinks segment, and to become the top market leader in

that particular segment within the forecasted sales figures. Nong Cha seeks to provide

bottled tea that tastes like tea- a world of flavor freshly brewed and barely sweetened. We

seek to provide better-tasting, healthier teas the way nature and their cultures of origin

intended them to be. We strive for relationships with our customers, employees, suppliers

and stakeholders which are as healthy and honest as the tea we brew:


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To stay at the forefront as the market leader in innovative product introductionsand successful product launches;

To strengthen and satisfy the needs of the more adventurous Generation Yconsumers with a new eye-catching and functional product;

To become the market leader in the functional drinks segment with increasedmarket shares.

Maintain the market leading position in Nepal, gain 65% market share at the endof year 1.

Increase revenue by 100% in year 1, 25% in year 2. Stop using short-term loans at the end of year 1. Reduce days for collecting debts from wholesalers to less than 30 days. Increase sales by 50% in year 1. Introduce at least one flavor before each summer. Develop a new market in Europe and America in year 1.

Further we have divided our objective in two parts viz. short term objectives and long

term objectives.

4.1Short Term objectives:Improve market presence by 20% through:a) Aggressive Marketing Strategy- We can take advantage of the positive press

on the health benefits of tea to boost the sales of its green tea product line. The

company can use recent studies on the health benefits of green tea as the basis

of its press releases and advertising campaigns.

b) Improve Packaging- Currently, the Nong Cha are available globally in twosizes: the 200 gm and 500 gm box. Nepal Tea House can come up with other

packaging sizes to ensure that consumers will have other choices and thatNong Cha will be easily and readily available to consumers.

c) Improve Shelf Presence Nepal Tea House is going to make a deal withretailers to ensure retail shelf space and prominent positioning for Nong Cha.

"Although an average shopper may not notice what brands are positioned in

prominent places on shelves or how much room is allotted to each


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manufacturer shelf space and positioning as make or break factors in

introducing new products".

4.2. Long-Term Goals:World Number One ready-to-drink green tea

Product Innovation Nepal Tea House continue its innovative research and

development strategy to come up with new flavors and products. Nepal Tea House has

extensive research facilities on product improvement. The company can use its

resources and professional expertise to come up with new flavors that will suit the

continuous demand for healthy ready-to-drink green tea.

With aggressive marketing strategy and product positioning, Nong Cha is poised to take

the global lead in ready-to-drink green tea industry.

5. Marketing Mix

5.1 Product Strategy

a) The core

Nong Cha is a tea bag with sugar, ready-to-drink tea also

available in CAN and Pet bottle

b) The actual product

Packaging and labelingIt is available in sachet, CAN and Bottle.

Branding: colorful, aspect of play, round shaped, prominentgreen tea leaf logo written in modern font, catchphrases such asThink outside the Nong Cha and Get Your Buzz.

Trade name: Nong Cha, a Nepal Tea House product. Brand personality: energy, funky, cool, functional, original, healthy, etc.


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Brand equity: Nepal Tea House provides a quality, consistent, innovative andaccessible soft drink reputation.

c) Augmented product

Nutritional information, Status (social drink), Features promoting the website, Health

benefit of a green tea base.

d) Marketing considerations

Product life cycle: Nong Cha is a low-learning product. With a strong marketingcampaign, sales will begin immediately and the benefits of the purchase are readily

understood. Since Nong Cha is prone to product imitation, Nepal Tea Houses

strategy is broaden to quick distribution, which is currently feasible due to companys

high manufacturing capacity.

Nong Cha follows the practice of product modification: Nepal Tea House is

introducing an existing drink but redefines it with a new, more convenient package.

Nong Cha will now become a widely available drink in multiple retailing (distribution)

channels.

5.2 Price StrategyNepal Tea House is planning to implement following pricing strategy in different market

segment:

a) Perceived-value pricingCustomers psychology is a crucial factor which is driven by tastes and quality of product,

income level of customer and availability of others similar products at a different price.

Customers perceived, value and price are highly related: the higher theprice, the higher

the value. Thus,Nepal Tea House will position its product as a high quality product and

will set high price based on value proposition. In that market where Nepal Tea House

have high control over customer, it will follow perceived-value pricing strategy

b) Markup pricing


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The most elementary pricing method is to add a standard markup to the products cost.

Nepal Tea House will follow markup pricing in that market where it has not high control

over its customer. Nepal Tea House will set price expecting 20% markup on sales.

c) Going-rate pricingNepal Tea House will set the price of its product based on competitors price, charging

the same, more, or less than major competitors considering competitors strength. Nepal

Tea House will follow going-rate pricing where competitive response is uncertain.

5.3 Promotion Strategy

Objectives:

To initiate strong awareness about the launch of Nong Cha throughout GenerationY (10-29 years old) consumers as well as their parents.

To win market shares over our top functional drinks competitor, Lipton, Taj.Message:

The promotional outputs will convey the clear message that Nong Cha is a healthy drink

for sporty and young people who simply enjoy taking care of their body and life.

Concepts:

Think outside the Nong Cha: Be Bold, Be Original, Be Different, Be Yourself. A good spirit in a good body. For the out-of-the-ordinary individuals who like to challenge themselves.

Media selection:

Before choosing the appropriate Medias, it is important to note that Generation Y

consumers only give partial attention to media. However, they can be reached through

integrated programs. They are typically using more than one communication media at a

time; a behaviour that is often called multitasking. This group of consumers doesnt

give its full attention to one single message, but rather uses continuous partial attention to


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scan the media. Marketers can still communicate with Generation Y by using a variety of

targeted promotional tools. Another important tactic to reach our target market is through

Viral or Buzz marketing, which Nepal Tea House will heavily use in this campaign

(campus, contests).

5.3.1 Promotional Mix:

a) Advertising:

Output Examples

Television NTV, Kantipur, BBC , CNN, CCTV

Radio BBC world radio

Magazines For girls: Cosmo, Elle

For boys: Sports Illustrated (or Kids edition)

Internet Banners on select websites (gaming, sports, etc.), social sites,

Official promotional website: www.nepalteahouse.com.np

Outdoors Billboards and prints in select areas including:

Campuses, transportation (bus, metro, stations) Tourist areas in high seasonal periods Outskirts of key cities in geographical reach

Personal

selling

Direct contact with retailers, sales kit strategies to be

explained later in the text.

Public

relations

Stands or special displays and events in schools, malls, sports

events, sponsorship activities

Publicity Conferences, press releases (print and online), buzz marketing

through TV coverage

Consumer oriented:

Contests: Win another Nong Cha flavour, Uncover a secret code underneath thepackaging and win sporting goods and electronics by logging on the website, Win a

trip for the Switzerland Trip. (Arguments: It will increase consumer purchases and

encourage consumer involvement with the product).


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Samples: distributed in supermarkets, school/universities. Samples are a way to avoidproduct resistance since people are not used to find Nong Cha in their drinks.

Arguments: It will encourage new product purchases and it represents low risk for

consumers since they get it for free. They have nothing to lose by trying it.

Point-of-purchase: in supermarkets (to reach the parents of generation Y).Arguments: It is also a mean to increase product trial and provides a good product

visibility.

Allowances and discounts: case allowance (Arguments: The free goods approachwill be used so it can encourage retailers to buy more of the product to get a certain

amount for free).

Cooperative advertising: to encourage retailers to buy our product and to maintainour high level of advertisement that consumers expect from Nepal Tea House.

Scheduling of the advertising: Pulse scheduling (promotional presence year-round,but emphasized and intensified before and during summer).

5.3.2 Promotion Schedule

Step Output Period of time Arguments

1 Personal selling February to September

To make European and American retailers

aware of Nong Cha so they can order it in

time for Summer time

2 Radio spots February to April

Radio is the most listened media by students

(based on researches); the target market

would hear our radio spot several times a

day. This will ease the recognition of Nong

Cha in future promotion tools.

3 Magazines ads Mid-March to June

The target market will then match an image

with the name of the product more easily.

The recognition of Nong Cha will be faster.

4 Television spots April to September

To send a widespread message over Canada

that Nong Cha is now available. Critical step

in the promotion.


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5 Sample distribution April to SeptemberTo get potential buyers to try Nong Cha and

to create an addiction to it.

6 Point of purchase April and September

Making a special section for the Nong Chain

Grocery store will help the new potential

buyers to find our product faster and more

easily.

7 Outdoors May to September

Putting adds in specific places where

Generation Y hangs out will create an

increased awareness of Nong Cha

8 Public Relations May to September

We will use special events (sports and

others) to promote Nong Cha and also to get

in touch with our potential market. It will

allow Nepal Tea House to interact with

our Generation Y Consumers.

9 Contest August to end of September

When the summer will come to its end, we

will use contest to give a second "push" to

the sales of the Nong Cha.

10 Publicity All the time

Use of conferences and news to make the

general public aware of the existence of

Nong Cha.

5.4 Place (Distribution Strategy)

Nong Cha will be distributed through these channels: supermarkets, convenience stores,

independent food stores, discount stores, multiple grocers, vending machines, direct sales.

6. Marketing Strategy

Our company needs to create compelling on- and offline marketing strategies, improve its

marketing message or increase business efficiencies, Nong Cha Creative CAN structure

is a strategic and tactical solution aligned with our business goals.

With an external and objective perspective, we assess our business situation, identify our

needs and priorities and use these findings to clearly define project requirements.


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After defining and agreeing to a project plan, we design, develop and deploy marketing

programs specific to our needs. Our solutions are simple to execute and cost-effective to

maintain. We also offer our clients project management services to ensure that any

project meets its deadline and achieves success.

Nong Cha clients benefit greatly from our balanced strategic, methodology and design

capabilities. We draw from our experience in generating business plans and creative

strategies to support a wide variety of marketing needs including: website development;

business development; product launch strategies; copy, advertising and direct mail

campaigns; event management; online and offline campaigns; public relations; joint

marketing strategies with alliances and partners; process improvement for customer

acquisition and retention.

7. Target Market

The tea market in world is quite wide because of the traditional drinking habit. There

are two major target markets for Nong Cha. One group is the consumers on the go.

These are the employees, students, and other consumers who lead a busy lifestyle. The

hectic American lifestyle demands for optimize productivity with lesser time-

consumption. Thus, there is a need for products that are accessible and readilyavailable. Convenience has dominated the market, particularly the food and beverage

industry.

The other group is a health conscious consumer, specifically the baby boomers who

patronize anything healthy. The positive reviews as well as the studies on the benefits

of tea drinking have stirred an interest in tea drinking. Nevertheless, as the company

wants to offer the best quality product, promotion and customer service, it only

chooses selected market segments that are most attracted.

a) GeographicAs in the countryside, people tend to drink fresh tea; Nepal Tea House chooses to

target the product in urban areas and some tourism cities.

b) Demographic


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Age: from 15 to 29 years old. They are the active group involved in manyoutdoor activities, and use ready-to-drink products very often.

Income:Because of its higher price compared to the other soft drinks, Nepal TeaHouse targets people whose income in the middle group ($500-$2500)

c) Behavioral Occasion: As Nong Cha is a healthful refresher, Nepal Tea House focuses on

both regular occasions (eg. Festivals) and special occasions (eg. sport

competitions, big performances).

7.1 Profile of Target Customer

When we combine these three trends and compare them with the demographics of

the Cultural Creative study as well as other market demographic information, we are

able to develop a profile of our target customers:

60% women, 40% men Median age 42, with a range from 30-65 Likely to live near a concentrated urban area Likely to have graduated college or have an advanced degree Interested in running, hiking and outdoor healthy activities Average family income $52,000 in developed countries.

8. Product Positioning

8.1 Positioning Statement

Funky & eye-catching bottle, functional packaging, premium-priced, cool, new and

unusual, unique drinking experience, aspects of play, variety of flavors, sweet, refreshing,

for hip & young people, healthier alternative to heavy-sugar drinks. To tea lovers, Nong

Cha is the first choice that satisfies both refreshing needs and convenience ones. Nong

Cha is distilled from fresh green tea to reserve the original flavor of green tea leaves;

bottled in PET, CAN and glass bottle (in the near future), which are very suitable for the


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modern life. Healthiness and convenience are what Nong Cha promises to bring to

customers.

The main factor for improving market performance of Nong Cha is its health benefits.

Consumers believe that green tea is very good for the body; thus, it is more logical to

drink more tea and less soda pop and other drinks. Consumers drink Nong Cha

because of its beneficial effects to one's health. Consumers consider drinking Nong

Cha as a healthy habit. The 100 percent Natural Tea and 150 mg of protective natural

antioxidants has made Nong Cha a major participant in the global tea market.

"Many tea drinkers choose Nong Cha due to superior quality and they can get it in

popular departmental store. It is surprising that more people do not used to drink tea but

now they do as it would leads to longer, happier and healthier lives.

8.2 BRAND DEVELOPMENT

Line Extension is mainly focused

New flavor:This summer, Nong Cha offers one more flavor to the market, whichis Jasmine green tea. However, in the near future, Nepal Tea House has the

strategy to develop Nong Cha combined with some common flowers fragrance,

and fruit.

Packaging: Nong Cha glass bottle 400ml is in production and it will beintroduced in the final months of year 1.

9. Financial Plan

This section will include the overview of sales forecast, expenses forecast, break-even

analysis and how they link with marketing activities.

a)

Sales forecast

In this report, we have presented sales forecast for the first three years. As our business is

in introductory phase, it is less likely to have high level of sales volume. In the first year,

Nepal Tea House is expected to sale its product in the market with the aim of getting

customer. NTH is expecting to increase its sales in the next years and will earn profit.


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b) Expense forecastAs NTH is in its introductory phase, the initial expenses could be high as compared to

upcoming year. Direct cost of sales will include all cost incurred in production process

(i.e. cost of material, direct labor cost, and other direct cost. It is expected to be 75% ofsales. A huge amount will be expensed for promotional activities. In the first three years,

fixed amount is allocated for promotional activities.

Projected Income Statement

Particulars Year 1 Year 2 Year 3

Sales (Rs.) 1,000,000 2,000,000 2,500,000

Less: Cost of Goods Sold 750,000 1,500,000 1,875,000

Contribution margin 250,000 500,000 625,000

Less: Fixed Cost

Administrative

Marketing/Promotion

200,000

200,000

200,000

150,000

200000

50,000

Operating Profit (150,000) 150,000 375,000


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Fig: Sales, direct cost of sales, & Net Profit forecast

BREAKEVEN ANALYSIS

Breakeven analysis indicates the sales required to reach the breakeven point. BEP

can be calculated by:

BEP = Fixed Expenses

Contribution margin ratio

Here,

Cost of sales ratio = 75%

Contribution margin ratio = 25%

Fixed expenses in year 1= Rs. 400,000

Therefore, BEP sales for Year 1 will be Rs. 1,600,000.

Fixed expenses in year 2= Rs. 350,000

Therefore, BEP sales for Year 2 will be Rs. 1,400,000

And

Fixed expenses in Year 3= Rs. 250,000

-500,000

0

500,000

1,000,000

1,500,000

2,000,000

2,500,000

3,000,000

Year 1 Year 2 Year 3

Amounts

Years

Sales

COGS

Net Profit


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Therefore, BEP sales for Year 3 will be Rs. 1,000,000

10. Control Program

When applying the Marketing plan to the products real market, it is necessary for the

company to have some methods of evaluating the efficiency of their work to support the

positive sides and fix the bad drawbacks, in order to build up a better product, service and

reputation. Control is the way that we catch failures in implementation or strategy for the

further improvements. The company may have set the wrongmarketing mix,aimed at the

wrong target market, or done poor initial research. Control is not a singular thing but a

host of tools for making sure that the company is on track. The tools that we have used to

check our marketing effectiveness fall under four types of control which are shown as

following;

a) Market researchIt is very important to conduct the market research to know whether the customers have

satisfied with the product or not. Consumers give feedback on how they assess the

product and customer services. The Market research helps the company to define thereasons, give solutions to the problems, and then improve them. To test the receptivity of

this audience to Nong Cha, we will going to held two focus groups in Nepal, New York

and America. The sessions, facilitated by an independent market research firm, provided

encouraging results and helpful guidance in terms of product line and label presentation.

The first focus group consisted of health-conscious women between the ages of 30 and 60,

all of whom occasionally drink bottled tea or bottled water. The second group was a mix

of men and women who were selected based on their responses to questions which

identified them as fitting the Cultural Creative profile. The sessions began with a

discussion of what was missing in the beverage market. Within 5 minutes, unprompted

by the moderator, both groups agreed that they wanted something that was not as boring

as water but didn't have all the "junk" in commercial bottled tea.
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Post-launch (monitor and control):We will be acquiring the constant feedbackin the form of questionnaires filled by the customers regarding our product, and

along with that various control measures will be applied to know about the

effectiveness of the marketing strategies that has been used.

For measuring marketing effectiveness we have also measures marketing activities

through:

Type of Control Prime ResponsibilityPurpose of Control Approach

I. Annual-plan control

Top management

Middle management

To examine whether theplanned results are

being achieved or not in

the terms of

predetermined goals.

Sales analysis

Market-share

analysis

Sales-to-

expense ratios

Financial

analysis

II. Profitability control

Marketing officer

Controller officer

To evaluate andimprove the spending

To examine where thecompany is making and

losing money

Profitability by:

Product

Territory

Customer

Segment

Trade channel

Order size

III. Efficiency control

Line and staff

management;

marketing officer

Efficiency and impact ofmarketing expenditures

Efficiency of:

Sales force

Advertising

Sales

promotion


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Controller officer Distribution

IV. Strategic control

Top management

Marketing auditor

To examine whether thecompany is pursuing its

best opportunities with

respect to markets,

products, and channels

Marketing

effectivenessrating instrument

Marketing audit

Marketing

excellence

review

Company

ethical and social

responsibility

review

Hence by following the various above mentioned control measure we can effectively

check out the problems that we are currently facing in implementing our marketing plan.

If our company is not achieving itsgoals,either you are implementing your plan poorly

or your plan has become irrelevant and needs fixing.

10.2 Statement and Aspirations for Social Responsibility

Although a statement of social and environmental responsibility is not usually found in

most business plans, these issues are central to Nong Chas identity and purpose. Not

only is the value of our brand based on authenticity, integrity and purity, but our

management team is committed to these values as well. We will never claim to be a

perfect company, but we will address difficult issues and strive to be honest about ourability or inability to resolve them. For example, we recognize that the labor and

environmental conditions on many tea estates are below internationally accepted

standards. We will strive to work with our suppliers to promote higher standards while

recognizing the limited influence we have as a small company. We value diversity in the

workplace and we intend to become a visible presence in the communities where our
http://www.marsdd.com/entrepreneurs-toolkit/articles/goals-and-objectives-kotler-on-marketinghttp://www.marsdd.com/entrepreneurs-toolkit/articles/goals-and-objectives-kotler-on-marketing


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products are sold. When presented with a purchasing decision between two financially

comparable alternatives, we will attempt to choose the option which better addresses the

needs of economically disadvantaged communities.

11. Contingency Plans

Acontingency planis a plan devised for an outcome other than in the usual (expected)

plan. Contingency plan is simply a secondary or alternative course of action that can be

implemented in the event that the primary approach fails to function as it should. A

contingency plan is often developed by

Identifying possible breakdowns in the usual flow of operations, and Developing strategies that make it possible to overcome those breakdowns and

continue the function of the organization.

The main aim of contingency plan is to minimize the impact of such predicted and

unexpected situations and how to plan for the business to resume normal operations after

the events.

The difficulties and risks may face in the near future are as follows:

11.1 Difficulties and risks: Quality and standard requirements imposed by international trading

partners

The international trading partners may impose quality and standards requirements

such ISO certified or quality certified by their home country. Tea, as a food item,

undergoes significant scrutiny in the international market for the product and is

exposed to relatively strict food safety regulations within the trading community.

The lack of adequate infrastructureThe lack of infrastructure imposes another obstacle to the expansion of the tea

industry. Lack of electricity forces the sector to opt for different energy sources,

leading to increases in the cost of production and a lack of competitiveness in

international markets. In addition, fuel shortages, a lack of roads and low quality


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processing facilities all contribute to the overall restriction of development in the

sector

Labor shortageNepal Tea House may face shortage of qualified and skilled manpower involved

in processing and production of green tea.

The entry into the market by an overly aggressive competitorSeeing the growth prospective many other competitors may enter into the market

which will create risk to the NTH.

In regard to the above mentioned difficulties and risks, Nepal Tea House has

following contingency plans:

Using upgraded machineries/equipment to process tea so that it will earn highvalue regarding qualities. Strong monitoring mechanisms are vital to ensure that

the quality is maintained from the cultivation and harvesting stage to the

packaging and exporting stage. Acquiring quality certifications such as ISO/

Hazard Analysis and Critical Control Point (HACCP) certification, among other

branding and marketing efforts, can assist in achieving the confidence of export

markets.

Using alternation power sources to operate the machines. Furthermore, NTH willbe focusing of growing tea to new areas like Kavre, Gorkha from where the green

tea leaves can be easily acquired with low cost of transportation.

The retention of labor in tea estates by ensuring the additional employmentopportunities. The company could increase the earnings of farmers through the

promotion of related industries such as tea tourism, which involves activities such

as tours around the tea plantations and experiencing the process of local leaf

production.


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The competitors are kept aside by including various product line in green tea suchtea, CAN, PET and simultaneously establishing a positive brand image of the

company in the perception of its consumer.

Reference

1. THEODORE, Sarah. RTD coffee, tea create a buzz. Beverage Industry. Feb 2005; 96; 2;p.16.

2. HANNAFORD, Steve. Industry Brief, Beverages. Oligopolywatch.http://www.oligopolywatch.com/2003/04/21.html

3. Consumer Lifestyles in Canada. Global Market Information Database (Euromonitor). Feb01, 2005.

4. THEODORE, Sarah. Surprising suggestions from teens. Beverage Industry. Vol.96, no 7.Jul 2005.


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Table of Contents

Executive Summary ............................................................................................................. 1

1. Introduction .................................................................................................................... 2

2. Situational Analysis ......................................................................................................... 3

2.1 Market Share Analysis .............................................................................................. 3

2.2 Market Analysis ......................................................................................................... 3

2.2.1 Macro-Environment ........................................................................................... 3

2.2.2 Micro-Environment ............................................................................................ 4

2.3 SWOT Analysis .......................................................................................................... 5

3. Marketing Opportunities ................................................................................................ 6

3.1 Beyond Snapple - The Emerging Market for Quality Tea...................................... 6

3.2 Explosive growth in Ready-to-Drink (RTD) tea and bottled water markets ......... 7

3.3 Beyond the tea bag -- The emergence of tea culture ........................................... 7


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3.4 The natural foods boom........................................................................................ 7

3.5 Rise of Cultural Creative........................................................................................ 8

4. Objective Statement ....................................................................................................... 8

4.1 Short Term objectives: ......................................................................................... 9

4.2. Long-Term Goals: ................................................................................................... 10

5. Marketing Mix ............................................................................................................... 10

5.1 Product Strategy ..................................................................................................... 10

5.2 Price Strategy .......................................................................................................... 11

5.3 Promotion Strategy ................................................................................................. 12

5.4 Place (Distribution Strategy) ................................................................................... 15

6. Marketing Strategy ....................................................................................................... 15

7. Target Market ............................................................................................................... 16

7.1 Profile of Target Customer...................................................................................... 17

8. Product Positioning ....................................................................................................... 17

8.1 Positioning Statement............................................................................................. 17

8.2 BRAND DEVELOPMENT ........................................................................................... 18

9. Financial Plan ................................................................................................................ 18

10. Control Program.......................................................................................................... 21

10.1 Implementation Plan ............................................................................................ 22

10.2 Statement and Aspirations for Social Responsibility ............................................ 24

11. Contingency Plans ....................................................................................................... 25

11.1 Difficulties and risks: ............................................................................................. 25

Documents

nong cha final.docx