Tea market segmetation - Research Paper Example

Sur PART 3 a. Target market The target market of the new brand and its product comprises of individuals belonging to an age group of 16-45 years old. The reason for targeting this market segment is due to the changing trends in the tea market and it is important for companies to target this segment which is very much influenced by coffee culture. Thus, it could be stated that the company will adopt psychological segmentation of the market as the company aims to address attitudes and behaviour of young customers who consume tea for refreshment, passion or health consciousness. As it has been indicated in this report that sales of herbal teas are 12% of total tea sales in the UK and there are opportunities for companies to achieve revenue augmentation as awareness of benefits of tea has risen in the last year. b. The need the new product will fill the gap that has been created through intense coffee culture but offering herbal and specialized teas by selecting finest sources and packaging it in a way to promote awareness of benefits of these types of tea and by adopting distribution methods which will attract individuals belong to younger generation. c . Product The new brand will introduce herbal and specialized teas in the UK market. Emphasizing on the health implications of such teas the company will acquire The new brand will introduce a unique selling proposition to the sale of herbal and specialized teas. It has been understood by the company that the herbal essence as a unique selling proposition is becoming weak and trends in the coffee retail industry are very strong to compete. Therefore, the company will have to make an attempt to fill in the gap that has been created in the tea market whether flavoured, non flavoured or herbal. The unique selling proposition of the brand will be its placement in the market through ready mix packaging which will allow young individuals consume it like instant coffees and juices. Packaging and logo Packaging and logo are important elements of the branding strategy. Keeping in view the marketing focus of the company the packaging of the new brand will be in the form of both hard and soft packaging. The company will offer herbal and specialized teas in three different forms including tea bags, loose leafs and ready mix. Tea bags and loose leafs will be packaged in paper and aluminium boxes in 50gm and 100 gm packaging. Cold ready mix teas will be packaged in soft pouch and also aluminium cans. The printing on packaging will not inform customers about the brand and its values but also provide history of herbal and specialized teas and their benefits according to the type of tea. The front of packaging will have soft images of herbal and specialized teas stored in it. The logo of the brand will comprise of a leaf image in green colour with colourful vibrant background. d. Place The company aims to adopt a step wise approach to the market where distribution network will be used to distribute different types of herbal and specialized teas to wholesalers, retailers, restaurants, hotels, and coffee shops. Wholesalers in particular will be engaged to make distribution to large retail stores such as Tesco, Sainsbury’s, and Asda, etc. The distribution intensity of the new brand and its products is dependent upon various factors including the size of the target market segment, pricing of the company and funds to be allocated for the promotion of the brand. Initially, the new brand will use selective distribution to sell its products to wholesalers and retail outlets and coffee shops in London Area. The reason for choosing this approach is due to the company’s unique selling proposition which needs to be tested out in one major region of UK tea market. Once the company gain experiences from this market then it will engage in intensive distribution throughout UK. e.Price There are various pricing strategies that may be considered when introducing a new brand in the market. Based on the characteristics of the UK tea market it is obvious that the new brand has to face tough landscape in terms of the intense competition between existing prices and their ability to produce and market tea at lower profit margins. According to BBC, the price of tea is rising due to the increase in demand for tea (Twining). Therefore, the company can adjust its pricing strategy according to the expected demand for its different types of herbal and specialized teas. There are two relevant types of pricing that the company can adopt for its products namely psychological pricing and cost based pricing (Ferrell and Hartline). The psychological pricing is relevant in sense that the company will offer herbal and specialized teas aiming at wider realization and acceptance of the benefits that these types of tea and the price of the product should not be at premium level as compared to black tea. This could incite greater demand for the company’s products by young and middle age customers who perceive herbal and specialized teas to have more positive health implications as compared to black tea. Another pricing strategy that is considered for the new brand is cost based pricing which involves estimation of costs to acquire different types of tea from different suppliers and putting it on the shelf of retailers or coffee shops and then adding a reasonable mark up on the cost. As the new company will specialize in import and distribution of herbal and specialised teas in the UK therefore it has to take into account the cost of consignment from different parts of world, storage, and repackaging before it sells to wholesalers and retail outlets. Though these pricing strategies are suitable for the new brand but at the same time it must into account the prices of competitors’ brands already available in the market. The price ranges of the new products are set as per the following table; Packaging Herbal Specialized Paper Box 50gm 3.99-5.99 4.50-6.50 Aluminium Box 50gm 4.50-6.50 4.80-6.80 Paper Box 100gm 8.25-12.25 8.99-12.99 Aluminium Box 100gm 8.50-12.50 9.25-13.25 Soft Pouch 250ml 1.75-1.99 1.99-2.50 Aluminium Can 250ml 1.75-1.99 1.99-2.50 Works Cited Ferrell, O. C. and Michael D. Hartline. Marketing Strategy. Mason, OH: Cengage Learning, 2010. Twining, Stephen. Tea prices 'rising due to demand', Stephen Twining. 12 May 2012. 8 December 2012 . Read More