Twining and Company Limited - Essay Example

?Executive summary Twining and Company Limited or Twinings for short, is the UK based seller and marketer of Teas. It does not grow or manufacture tea, and instead source variety of finished Tea from a widespread, well-established network of growers and suppliers. Thus, Twinings sell wide varieties of Teas in UK and all over the world. Although, it has good market share and reach aided by effective marketing campaigns, its reach and profits can be optimized even further particularly in the approaching Christmas season in Hull. Although, Twinings have a broad customer segment, it can focus on the four prospective segment of female population particularly professional women, college or university students, catering services and health conscious customers in and around Hull. With its existing products providing good results, Twinings can launch its marketing campaigns incorporating certain effective aspects of marketing mix to increase its market share and profits even further. Twining and Company Limited 1. Introduction Twinings is owned by Associated British Foods, a FTSE top 50 company with an annual turnover exceeding ?4 billion, since 1964. (twinings.com). Twinings does not own any tea gardens or any tea factories, and instead they source form a well developed network of tea estates and suppliers. These network of growers and suppliers of Twinings were from India, Sri Lanka, China, Kenya, Indonesia and Brazil. (twinings.com). Twinings markets these sourced tea under various brand names and varieties, currently selling more than 100 varieties of regional and flavored teas. Twining has a strong team of tea tasters or quality controllers, marketing team and other departments to reach the finished tea to the target customers in UK, France, USA, Australia Scandinavia, Russia, Italy and some Asian countries. (twinings.com). Twinings is selling these varieties of tea backed by a strong marketing campaign, which can be further optimized to make it competitive during the period of Christmas 2011 in Hull in UK SWOT Strengths Twinings have a longstanding presence in tea market, having been established 300 years ago. (twinings.com). Have a strong long-standing relationship with growers and suppliers from around the world. As they do not own any tea gardens and tea factories (so they do not grow or manufacture), they does not need to use their own produce, instead they are sourcing quality tea from various growers, manufacturers and suppliers. (twinings.com). Follow advanced and quality processing standards and technique (twinings.com). Founding member of Ethical Tea partnership Weaknesses Strong dislike for its The New Earl Grey variety or brand among majority of its customers. (Brown). Customers disliked the taste of The Early Grey, with many customers complaining the new variety makes it hard for them to sleep at night. (Brown). Although, Twinings is the founding member of Ethical Tea Partnership, it is being accused of indulging in unethical practices Twinings does not offer price advantage, as its products’ price is equal to or more than other brands’ high price. Opportunities Twinings can offer a range of “specialty Teas, infusions and Green Teas to maximize profit potential from high margin products.” (twiningsfs.co.uk) Twinings has good opportunities in the health tea segment and can offer more varieties of health enriching teas to health conscious customers It can offer Premium tea experience as the customers are prepared to pay more. (twiningsfs.co.uk) Can tie-up with food outlets and other restaurants Can also associate with or sell to catering companies which does service in the hospitality, airlines and other corporate sectors. Threat Dislike among customers for new varieties Twinings’ decision to shift its production processes from UK to Poland and China, could lead to job losses among the local population, thereby creating negative image among the UK target customer base. (telegraph.co.uk 2011) Entry of low priced equivalents from local manufacturers as well as foreign manufacturers, particularly Asian manufacturers (telegraph.co.uk 2011) Fierce competition from other beverage drinks including coffee and other carbonated drinks Worldwide tea arable land is decreasing due to other commercial activities (Dion 2010) 3. Marketing objective (Ansoff) Products Markets Market Penetration As part of market penetration, Twinings has to focus on penetrating its existing market with existing products, but in a more optimized manner. As mentioned above, Twinings has a good range of diverse products from tea to the currently launched chocolate drinks. In addition, they have got a foothold in all the opportunity filled markets in Europe, America and Asia. Importantly, they are increasing the usage of its existing products in the current market, by bringing back the successful brands based on customers’ demand, like in the case of Earl Grey, the Classic Edition. In addition, they are focusing more prominently on the target segment of women population through marketing initiatives like Take 10. This being the case, Twinings can make more market penetration in Hull by coming with effective marketing strategies coupled with good pricing strategies in view of the fast approaching 2011 Christmas. (McDonald and Morris 2004) Market Development Twinings as part of market development wants to develop non-traditional areas by associating with food outlets/restaurants and other Catering services. That is, apart from its traditional selling options of retail markets, grocery stores, drug stores and even online stores, Twinings can develop its market using its existing products, by focusing on the above mentioned non-traditional areas. Although, Twinings have a wing called Twinings Food service, which provides to the Catering services, it can further improve that wing in relation to the 2011 Christmas season in Hull. As far as food outlets and restaurants are concerned, Twinings has existing products particularly Twinings’ Tea Deli, which can optimally marketed. “Helping caterers meet the growing demand for the premium tea experience out of home, Twinings Tea Deli has been developed for outlets looking to expand their tea menu and offer a tea experience with a difference.” (fdin.org.uk 2010). Product Development When it comes to Twinings’ product development, it has started introducing new tea variants plus non-tea products like chocolate drinks. Companies dealing with Tea can develop new products or new variants at will because it involves only minimal product development process. In certain products, the uniqueness factor rarely lasts, because functional product innovations are developed everyday, and this is quite applicable to tea products because with the addition of few ingredients or changing the combination of ingredients, new products can be developed. (Wong 2006). Twinings also developed new products particularly focusing on Chocolate based products like tinned chocolate drinks and even tinned coffee drinks, and these also can be optimally marketed in Hull. Diversification As diversification focuses on launching new products in new markets, Twinings is doing the same. New markets in the sense, as discussed above, Twinings apart from focusing on new geographical markets is also focusing on non-traditional markets with new products. As the focus of this report is UK centric or Hull centric, Twinings new products for its non-traditional markets has to be focused. In that direction, Twinings has been coming up with new products focusing on the catering services particularly in the hospitality sector. For example, during the Royal Wedding of Prince William in March this year, Twinings released two new products for hospitality operators, a stronger Earl Grey Blend, and a special commemorative Royal Wedding blend, in order to aid the caterers make the most of the celebrations surrounding the Royal Wedding. (Paskin 2011). Target markets With Tea being a commonly used drink, the target customer market for Twinings is broad and widespread, even in a specific area like Hull. As Tea consumption is a common practice in the mornings or in the evenings in many households and even in corporate settings, Twinings have a sizable market to target. “Tea is sometimes billed as the national drink of UK, as the Brits consumer 180 million cups a day” (Else and Davenport 2009, p.95). At the same time, many non-coffee drinkers are also started favoring Tea. In addition, many are favoring flavored Teas as well as other variety Teas, and this target segment can also be targeted by Twinings. “Tea is consumed by a broad target group and the core user for Twinings is somebody who recognises quality and likes to be that little bit different from the crowd.” (twinings.com). Among this board target group, in the recent times, Twinings started focusing on the female population, including the professional women and homemakers. With campaigns like Take 10 accompanied by a TV advertisement, Twinings are targeting the professional women as well as others, who are having a hectic schedule. In the same way, students studying hectically in universities in Hull including Hull university can be focused. Twinings’ Teas are portrayed as products, which can enable the continuously working women to pause for some time, drink a Tea and recharge themselves. Apart from these prospective target segments, as discussed above, Twinings can focus on the food outlets or restaurants as well as catering services providers operating in and around Hull in a more focused manner. Importantly, the health conscious segment of the population can also be targeted by Twinings with their health enriching tea varieties. (McDonald and Morris 2004). Product offering The above discussed four key target segments of women, college goers, food outlets as well as catering services and health conscious segment can be targeted by Twinings by offering a variety of traditional tea brands like Earl Grey, flavoured teas, infusions, coffee based drinks as well as hot chocolate. All these products can be offered to the three four segments, with slight modifications according to its purpose. For example, as pointed out previously, Twinings gave a modified version of Earl Grey brand for the catering services during the Royal engagement, and so, on those same lines, Twinings can come up with target segment specific varieties. These varieties will only be minimally different from their original versions, as the main ingredients will be the same with some minor additions. As far as the target segment of professional women and college students are concerned, all the products of Twinings can be marketed to them, particularly the teas that can refresh them effectively and quickly can be focused. However, as the new Earl Grey brand has been accused of causing sleep, it can be avoided as the women and students would want something that would refresh them optimally. For the health conscious customers, Twinings can offer its line of teas including Green Tea, herbal tea, etc. The bottom line is, as Twinings have a wide range of products, it can cater to any target segment, without the need to develop an all new product or products. This advantage of Twinings was pointed out by Hall (2000, p.217) who stated that “Twinings, appears to successfully straddle the line between grocery and specialty distribution, depending on the varietal blend. For example, English Breakfast and Earl Grey teas are most likely to be seen in supermarkets, while it’s Lapsang Souchong and Russian Caravan varieties remain solidly placed in the specialty market.” Product /Brand Positioning Twinings can position its brands according to the customers they are targeting. As mentioned above, although tea is consumed by a broad target group, Twinings can focus on four target customer segments in the coming days or months in lead up to the Christmas 2011. These target groups will mainly want the already successful brands or varieties, and so these brands have to be positioned above the new brands. Twinings seems to have learned it in a hard way, after it received a lot of brickbats after it positioned its new variation of Earl Grey called The Earl Grey above the traditional Earl Grey. “After complaints from customers about its tampered-with new blend, which was rebranded as The Earl Grey and made with extra bergamot and lemon for a more citrussy taste,” Twinings brought back the old blend under the name of Earl Grey The Classic Edition. (Brown). This clearly shows that the target customer base can be targeted by positioning the existing and successful brands in a strong manner. Marketing strategies (marketing mix) Product When it comes to Twinings’ products, it has to come with marketing campaigns that will market the existing range of products optimally, without the need to drastically modify its current products and launch a brand new marketing campaign. Already, Twinings did that unsuccessfully in the case of Earl Grey. There is a key thing that has to be said about this failed strategy of Twinings and that is, “it demonstrates once again the folly of big companies meddling with much-loved and patented recipes. Look what happened with New Coke (the 1985 reformulation) and Classic Coke.” (Brown). Although, Twinings has been successful with its stronger Earl Grey as part of Royal Wedding blend, as it was the case with it, only minor changes in the product’s ingredients would be accepted by the customer, and not major changes as in the case of The Earl Grey. Thus, it is imperative on the part of Twinning to come up with marketing campaigns that are focused on its current products only for the approaching Christmas holiday season in Hull. Price When it comes to pricing as part of the marketing strategy, competitive pricing could work wonders for Twinings. (Brassington and Pettitt 2007) Its’ not so lower price, when compared with its competitors is considered as one of its weaknesses. So, it can lower or offer discounts on some of its brands. All the brands do not need to be offered discounts especially the successful ones and importantly premium brands. Successful ones like Earl Grey will continue to entice customers including the broad customer segment, women customers and catering services without the need to price cuts, and in the case of Premium brands also price cut is unwanted, as customers are more than willing to pay a better price to get a better quality product. For example, customers are willing to pay up to 15% more for that Premium tea experience from Twinings brand “as the name itself is a reassurance of quality” (twiningsfs.co.uk). However, Twinings can offer discounted prices for the students population and also on its Green Teas and Herbal teas, to entice more health conscious customers Place When the place aspect of Twinings’ marketing strategy is focused, it mainly deals with the grocery stores, supermarkets, chemist shops, etc and importantly the distribution network that supplies to those retail outlets. In Hull, the areas in and around the Newland Avenue, Prince's Avenue and importantly Hull University has been witnessing large number of cafes and bars being opened. So, Twinings can approach the outlets in these places to sell as well as serve their products. As these outlets will be themselves carrying out marketing activities, Twinings for their part can place advertising boards, posters, etc., in those outlets. However, if the key part of distribution is carried out optimally, it can also make a positive impact on the minds of the customers. “Physical distribution is a major element of place, and is important in the entire trading process-in the business of getting the right product to the right place at the right time” (McDonald and Morris 2004, p.116). That is, as pointed out earlier, Twinings does not grow tea plants or leaves and also does not manufacture the tea, only growers do that and then provide the Twinings with the finished tea. Thus, Twinings has an established network of tea growers and suppliers estates worldwide and so the distribution or supply network has to be managed optimally. Twinings have to optimize its distribution process because it will only make sure that the product reaches the customers, when they need it. The customer in U.K. including Hull most times will have a limited inventory of products, maximally preferring to buy it when required. So, their purchase decisions will be sizably influenced by the availability of product in the racks and that is why the Twining has to optimize its distribution process. Promotion When it comes to promotions, Twinings has already launched few effective marketing campaigns. For example, the campaign of Take 10 targeting the customer segment of women with an animation featured TV advertisement is already receiving good reviews, and importantly attracting the women folk. As it empathized with the professional women’s inability to have time to pause and relax, it created good coverage. With that successful advertisement, Twinings could also come up more new TV adverts basing on the same concept as well as students centric concept for the Christmas season as well. This TV advert can be featured in the Hull’s local TV stations like YTV (Yorkshire Television Ltd), as well as in the video displays in Hull’s Railway Terminus, shopping malls, etc. In addition, audio form of the advertisements can be promoted through many of the local radios in Hull including BBC Radio Humberside, Viking FM, WHCR and even in the Hull University radio station called Jam 1575. (britishservices.co.uk). To target the other target segment of catering service and health conscious segment, promotions can also be carried out through local newspapers of Hull particularly the widely read Hull Daily Mail, as well as other commercial and catering related magazines like Tenfoot City Magazine, Sandman Magazine, etc. (britishservices.co.uk). Implementation & control All the above discussed aspects of marketing strategy can be implemented by Twinings as soon as possible to optimally tap the opportunities during the Christmas season in Hull. As tea is a common consumable product in U.K., there are already a good number of tea marketers, manufacturers, etc., like PG Tips and Tetley, Premier Foods, Bettys & Taylor, Lipton, etc., whose product or brand had garnered good market share in Hull. (Reyes). These tea brands have created a strong brand association among the customers, as they were catering to their tastes for many years. With Hull market being already endowed with these many strong brands, Twinings has to come up with optimum marketing strategies in line with the above discussed marketing mix, and by focusing and enticing the four key customer segments. In addition, its earlier decision to hire London-based design firm Pi Global to lend a “charming, friendly yet sophisticated” look to the brand, can augur well for future campaigns in Hull as well. (Reyes). Budget When one focuses on the budget aspects, as Brassington and Pettitt (2007) state the marketer has to work within the resource capabilities of the organization, and specifically work within the agreed budgets. However, when it comes to the budget for the marketing campaign for the approaching Christmas season in Hull, it won’t be a problem, because Twinings is already allocating sizable budgets for its nationwide marketing campaigns. For example, for the recent Take 10 campaign, Twinings allocated around $5 million out of the total $6 million marketing budget. (Reyes). This being the case, the marketing campaign for the 2011 Christmas season in Hull can be optimally carried out, enticing good number of customers, and thereby bringing good profits. References Brassington, F and Pettitt, S 2007, Essentials of Marketing, Financial Times Prentice Hall. Brown, AM 2011, Earl Grey tea is back: Twinings gives in to outraged tea-drinkers, viewed on December 11, 2011 http://blogs.telegraph.co.uk/news/andrewmcfbrown/100102578/earl-grey-tea-is-back-twinings-gives-in-to-outraged-tea-drinkers/ britishservices.co.uk, Hull TV and Radio Stations, viewed on December 11, 2011 http://www.britishservices.co.uk/television/north-humberside/hull.htm Dion, P 2010, Soil Biology and Agriculture in the Tropics, Springer. Else, D and Davenport, F 2009, Great Britain, Lonely Planet fdin.org.uk 2010, Twinings introduces new Tea Deli range, viewed on December 11, 2011 http://www.fdin.org.uk/2010/07/twinings-introduces-new-tea-deli-range/ Hall, SF 2000, From Kitchen to Market: selling your gourmet food specialty, Dearborn Trade Publishing. McDonald, M and Morris, P 2004, Marketing: a complete guide in pictures, Gulf Professional Publishing Paskin, B 2011, Twining launches new Royal Tea Blends, viewed on December 11, 2011 http://www.bighospitality.co.uk/New-Products/Twinings-launches-new-royal-tea- blends Reyes, S, Strategy: Twinings Tea Tries Bagging Luxe Seekers, viewed on December 11, 2011 http://www.allbusiness.com/marketing-advertising/branding-brand-development/4674014-1.html Smart, G 2010, Lady Char Char, viewed on December 11, 2011 http://www.thesun.co.uk/sol/homepage/showbiz/bizarre/3060672/Lady-GaGas-deal-with-Twinings-tea.html telegraph.co.uk 2011, Twinings to leave Britain for Poland, viewed on December 11, 2011 http://www.telegraph.co.uk/finance/newsbysector/retailandconsumer/7982817/Twinings-to-leave-Britain-for-Poland.html twiningsfs.co.uk, Profit Opportunity, viewed on December 11, 2011 http://www.twiningsfs.co.uk/ooh_advice/index.php twinings.com, Media Q&As: Twinings’ 300th anniversary, viewed on December 11, 2011 http://twinings.com/int/media/300_yr_anniversary_media_qandas.pdf. Wong, L 2006, Brand Think: A Guide to Branding, Trafford Publishing. Read More