Industry and Market Analysis of Wellington Tea - Case Study Example

Final Project Section Business Wellington Tea allows people to create personalized tea blends. For the purpose of the study the organization has been selected. Mission The mission of the organization is to bring health-benefits and delights of high-quality customizable teas to the globe. The synergy of the online outlets is linked to the retail outlets. Therefore, tea community will enable people to share the creativity, experiences and personalize blends about tea. Vision The vision of Wellington Tea is to lead the global online customizable tea industry thorough sales. Business Goals and Objectives Wellington Tea Wants to introduce blended customizable tea through online and want to lead the global online tea industry. Want to expand business globally. Development of a successful website in order to build a healthy relationship with the consumers and retailers. It is a believer of healthy living, creative choice, and power of communication and community. They are trying to add value to the products and services. Section 2- Industry and Market Analysis The extensive use of internet allows people to interact with the organizations they are consuming from. Customers also gain knowledge about the products and features of the products through the websites of those organizations. The customers want to consume the personalized products. They do not want to be treated as mass general customers. Tea is the most popular and consumed beverage in worldwide. Almost 80% of total households in US consume tea. More than 154 million Americans take tea. Not only in US, in almost every country the consumption rate of tea is increasing day by day. Now-a-days people want to stay active and feet. They are becoming more health conscious than the previous years. People of young generation always look to stay healthy, feet, want to gain stamina and energy. Therefore, as the demand of people is increasing the potentiality of the industry is increasing. Increase in health awareness has driven the people of world to consume more number of products related with tea. The increasing customer base of tea in global market is the example of growing customer demand about tea. In the year 2010 the size of tea industry in US was 7.7 billion US dollar, which is quite impressive. After the era of Dark fast food nation the preference of customers shifted towards the healthier drink. The retail sales were more than 2 billion US dollar. The away from home consumption at that time had increased by almost 10%. Few large tea companies like Lipton and Crystal Light has dominated the US market place throughout the past years. Slowly and gradually the Americans has started to use tea bags as it consumes time. Therefore, sales of instant tea are gradually decreasing and the retail chains are becoming popular in global market place. There are several uncontrollable variables that exist in market place which may create risk factors. Increase in the price of raw materials such as loose leaf of tea and unpredictable sales growth of tea through online may create risk factors. In order to achieve profit the organization have to increase the price of products as the substitute product has the same potentiality to grab maximum market share. Therefore the organization needs to control the manufacturing and operational cost. Fulfillment of sales orders, delivery within deadline may reduce the risk of unpredictability of online sales growth. The growth of this industry is impressive enough. Since last 20 years the industry has contributed a major role in the development of several economies. Section 3- Competitive Analysis Tea is the popular energy drink in the world. The global industry is very much potential and competitive enough. Wellington Tea is going to start an online customizable tea business, which is very unique business plan. The company has to face huge competition from the existing players as the company is starting a new business. Primary Competitors The competitors of an organization that offer an identical product or services are known as primary competitors. In terms of Wellington Tea the primary competitors are Teavana, Adagio and Remedy Tea. The operation and customer services of these competitors are very much similar to the Wellington Tea. The competitors are already popular brand due to adequate customer service within industry but Wellington Tea has got all the competitive advantages. They have priced their product less compared to the competitors. They distribute their products thorough their online stores and shopping centers. Secondary Competitors The competitors of an organization that offer a substitute product or services are known as secondary competitors. Coffee companies are the secondary competitors of Wellington Tea. The secondary competitors of Wellington Tea are Nescafe, Bru coffee and Lipton coffee. Coffee is the popular substitute of tea. Several people globally like to take coffee as it satisfies their energy level. The three organizations have created benchmark within the industry by providing coffee with seer quality. Section 4- Marketing Strategy In order to create a business plan an effective marketing strategy is required. The marketing strategy includes the target market and marketing mix strategy. Target Marketing People of all genders and all ages are potential customers of Wellington Tea. Maximum people like to consume personalized products. The organization should target the people who are from tech savvy generation Y. Moreover; people of both genders and all ages like to take tea. The organization should target the educated customers with medium income level. Among the online buyers, the organization has defined primary target market in terms of psychographic individuality. The organization’s primary target market would be Food Actives and Well-Beings. People who follow global trend of healthy eating and lead healthy lives are the primary target audience of Wellington Tea. The secondary target market of Wellington Tea would be the people who are willing to lead a healthy life but still they had not made the essential changes in lifestyle. Marketing Mix Wellington Tea will serve health and creativity in the form of tea. In order to create a successful business plan an appropriate marketing mix strategy is very much necessary. Product The key feature of the product of Wellington Tea is the customer-co-creation. It allows customers to personalize their own tea. The organization will offer a lively atmosphere. Moreover, the organization will construct a social community which will motivate adventure and creativity. The customers will make the personal blends of loose-tea leaf to supreme quality ingredients. The personalization of tea promotes self expression, feelings of individuality, control and making responsible choice. The community of tea consumers will enjoy fun by sharing their fun experiences through social media. Generally the online buyers look around on the website, gather knowledge about the products and compare the price and benefits with the other products before making a purchasing decision. Therefore, due to the conscious and cognitive shopping process the organization needs to handle the quality of tea carefully in order to satisfy the customers. Price The price of general 10 pack tea blend bags would be 3.99 US dollar. This is the lower price comparing to the other competitor’s pricing. The price level would be very much within reach of mainstream customers. Price of raw material like loose leaf tea will differ product by product with an average of 1.99 US dollar per ounce. The pricing should be based on the competitors’ pricing strategy. The low price level of quality product will increase the competitive advantages of the company. Organization should draw a large number of customers by appropriate pricing strategy in order to gain competitive advantages over the competitors in global market place. Distribution The organization should rely on the direct selling activities with the help of their website. This direct sales activity will keep the low price of product low for the consumers in order to respond quickly to the needs of the customers. The two sales channels should attract somehow the overlapping consumer group. The online retail outlets will attract the customers who look for the personalized specialty tea. This will give an exciting new experience of shopping to its customers. The online purchasing is slowly and gradually becoming very much familiar to the customers. As tea is durable and light, it is good for online purchasing. Moreover, the organization should set up a retail outlet in some shopping malls. As the retailers are the biggest consumer of tea the organization should set up a brick and mortal store. The online shopping can give 50% sales. In order to achieve the rest they should start retailing. Promotion The organization should focus on highlighting the customer involvement in creating new exciting beverages and offer the customers fun shopping experiences. The healthy life style image of tea can easily create an online community. Product positioning is important enough for a product. The tea bags and beverages should be positioned as healthy, tasty, fun and convenient. The looks get up and physical evidence of every retail outlet should be attractive, colorful and similar to each other. Moreover, they can use print media, digital media and social media in order target mass customers. Effective public relation in the retail outlets will be the practical example of effective promotional activity for the organization. Section 5- Human Resource Requirements In order to make an effective business plan an outline of organization structure is very much essential. Board of Advisers and Management team is required for an organization the structure is being described below. Wellington Tea needs to appoint two managers with the qualification background of MBA in Marketing and Entrepreneurship and MBA in Finance and Accounting. Under them they need to appoint product and operation manager with the qualification background of MBA in Product Management and MBA in Operations, Logistics and Supple chain. Finally the organization needs to recruit the junior employees’ basis on the minimum required qualification of graduation. Section 6- Operational Issues The organization should set up their retail outlets by taking as rent for next five years. As the organization is going to start new business, they need to always think about the exit strategy if they struggle to make profit. Therefore, in terms of five year business plan they need to take rent for five years. The initial start up cost is 429000 US dollar. Advanced information communication technology can be implemented in their operation. As the organization is introducing both online and retail sales, they should implement the ICT services like PDA and Web Designing of ICT. Moreover, in order to keep the natural weather condition favorable for tea in outlets Wellington tea should use advanced in house technology. A spacious warehouse is required in order to process the finished product. As tea is the sensitive food product, the operators should carefully monitor the manufacturing process. Section 7- Financial Projection The business is totally a new one and it has been planned to start the business from 1st April 2013 with an initial cash of 42900$ and during the year it has been projected to raise 35050$ into the business through issue of shares in market. The projected balance sheet as on 31/3/2014, projected income statement during the year 2013-2014 and projected cash flow statement during 2013-2014 are as under- Projected income statement for 2014 (in $) sales     25000 less: cost of sales(including depriciation 5000)     18750 gross profit     6250 selling & admin expenses   250   other expenses   300 550 net income     50550 Projected balance sheet for 2014 and 2015 (in $) Liabilities 31/3/2014 Assets 31/3/2014 share capital 35050 furniture and fixture 2875 reserve 63625 plant and equipment 25750 provision for depreciation 4850 stock 3125 creditors 7875 debtors 9500 outstanding expenses 125 investment 3050   cash and bank 67225   111525   111525 Projected cash flow statement for the year ending 31/3/2014 (in $) cash flow from operating activities collection from customer   9500 less payment to supplier 7875   payment for expenses 675 8550 cash from operation   950       cash flow from investing activity purchase of investment   3050 purchase of plant and equipment   5750 purchase of furniture and fixture   2875  Cash from investing   -11675 cash flow from financing activity issue of shares   35050  Cash from financing   35050 net increase in cash and cash equivalent   24325 opening cash and cash equivalent   42900 closing cash and cash equivalent   67225 The above projected financial statements reflects that sales during the year will be 25000$ and net income after meeting all the expenses will be arrived at 50550$. Further, cash flow statement depicts that cash and cash equivalent at the end of the year will be 67225$. Section 8- Executive Summary Wellington Tea is a retail tea company allows people to create personalized tea blends by the utilization of their website. The organization is going to start up a business. In an interactive online procedure, consumers choose from several herbs, tea leaves and spices in order to create a tea blend. The organization is offering their customers an exciting and new way of purchasing tea. It helps the involvement of the customers in the Wellington Tea Experience. The experience encourages the healthy living and originality. The extensive use of internet gives freedom to the customers to choose a specific product in order to satisfy their needs, want and desire. The business model of Wellington Tea is based on low cost mass production, principles of mass customization with the flexibility of customization of people. The organization has an outstanding opportunity to become one of the leading mass customization players in global competitive market. In the year 2010 the size of tea industry in US was 7.7 billion US dollar, which is quite impressive. After the era of Dark fast food nation the preference of customers shifted towards the healthier drink. Therefore it is feasible that day by day the tea industry in global market is becoming highly potential. It is expected that the size of the industry will double in next few years (Beltrone & Vitalis, 2011). Wellington Tea anticipates enjoying attractive profit margin due to the product efficiency and premium pricing of the products. The organization is expecting cash flow positive in next three years will make profit in 4th year of business operation. References Belton, J. & Vitalis, E. (2011). Creativi Tea: Business Plan. Retrieved from: http://www.business.umt.edu/Libraries/LaurieToomey/CreativiTea_Business_Plan_Master_1.sflb.ashx. Read More