Acme Tea Marketing - Business Plan Example

Marketing Plan: Acme Tea BY YOU YOUR SCHOOL INFO HERE HERE Marketing Plan: Acme Tea 0 Introduction ACME Tea is seeking new market entry in theUnited Kingdom. This is an opportunity to build more revenues and create a global brand name. What makes ACME different from competition is the quality of teas produced and a strong quality assurance focus. The United Kingdom is the best new market for entry because tea is the main social drink in the country. Therefore there is already much demand from many different consumer segments. This makes the UK a much better opportunity to expand the brand. The average UK buyer consumes 1.9 kilograms of tea each year (FAO 2014). This is much higher than most countries around the world. Tea has been a staple beverage in the UK since the 1800s and is today still believed to be a sign of refinement, culture and class (Guerty and Switaj 2004). Therefore the UK market is a perfect chance to gain a positive brand reputation as ACME is very focused on top quality product and staying exclusive. 2.0 Competitor analysis There are five main tea brands in the United Kingdom that will be the most critical competition to outperform. These include Tetley Tea, Bettys & Taylors, PG Tips, Premier Foods and Associated British Food. Tetley currently holds the highest level of market share at 27 percent, PG Tips with 24 percent and Premier Foods 13 percent (Dandotiya 2012). Tetley, owned by Tata Global Beverages, will provide the most competitive risk. Tetley, in the UK, has a very recognised brand name and has been a leading provider of quality teas since the 1950s. Tetley has been building a brand identity for three generations and the company is very good at promotion. In the 1950s, famous singer Petula Clark created a music single called “Anytime is Tea Time Now” which was used to promote Tetley on the radio. This not only popularised the brand, but gave Tetley the best reputation for quality in many consumer segments. 2.1 Micro analysis Porter (1985) identified five forces that have impact on competitive success or failure. These include threat of substitutes, competitive rivalry, new market entrant threats, supplier and buyer power in a market. The two main factors that ACME must consider when building its marketing strategies are competitive rivalry and threat of substitutes. The most important risk to ACME is competitive rivalry. Today, Tetley uses a blend of sweepstakes promotions, packaging innovations and product-related diversification to stay on top and improve its market share (BrandsTell 2011; Tea Infusion 2008). Tetley also uses product placement and sponsorships with major motion pictures to continue to keep its brand on top. In 2010 Tetley co-branded with the film Alice in Wonderland, launching a new commemorative tin with characters from the movie. This strong emphasis on promotion keeps Tetley relevant for the younger generation. Also, a 2013 study with the aim of finding out whether tea is safe for human consumption gave Tetley the highest ratings over competing brands. Before and after boiling, Tetley showed the lowest microbial properties (Hossain, Karim, Begum, Islam and Hoque 2013). Tetley was able to publicise these empirical results to give a further positive reputation for quality. ACME will have to focus on promotions if the company is to take market share from this powerful competitor. There is a very strong threat of substitutes in the UK. Starbucks and Costa Coffee, two of the largest coffee houses in the country, offer tea products. Costa Coffee has 1,578 stores throughout the UK (Poulter 2013). Costa Coffee has such high demand that its revenues versus expenses have given the company a high operating income of £341 million (Whitbread 2011). Starbucks is also a very strong competitor holding 37.6 percent of market share in the coffee and beverage industry in the UK. Starbucks had revenues of 1.2 billion Pounds in 2012 (Bergin 2012). Consumers can also purchase tea at such restaurants as McDonalds (a strong brand name in high demand) and many local outlets. Even vending machines in the UK provide tea and other beverages, as well as convenience stores selling canned tea-based products and energy drinks. Unfortunately, in 2011, it was found that tea sales dropped because espresso was becoming widely popular in the UK (Wallop 2011). ACME will have to identify how to persuade consumers to choose tea over the many different options they have in this country with a good distribution and production infrastructure. The other elements in the five forces model represent very limited risk to ACME, as the supplier network is already well-developed with procurement stemming from Singapore alone, hence supplier power is not of significant concern for the company. Pricing for competitor tea products is very competitive and customers do not pose a risk for backward integration or dictating reduced pricing, hence buyer power is quite limited. With creative marketing, threat of new entrants is also quite limited as the costs of entering the market are substantial. 3.0 Identifying the target consumer It is of good fortune for ACME that tea is a staple drink with all ages and demographics. For example, 88 percent of adults over 65 drink tea regularly. A total of 73 percent of consumers between the ages of 15 and 34 drink tea (Data Science for Research 2014). Tea is drunk for breakfast, lunch, dinner and as a pre-dinner activity. It is very expensive for a company to develop many different marketing strategies that are targeted at many different markets. Since tea is an important social and cultural value in the UK, ACME should take a mass market strategy that would have appeal to all different demographics. Consolidating marketing activities will be more cost-effective for ACME. Many companies such as Cadbury use a mass market approach using different marketing mediums to gain the attention of diverse consumers. Fortunately for ACME, the UK is ideal for this strategy. 4.0 Addressing consumer needs and providing value Prices on tea in the UK have risen sharply due to decreasing supply (Mills 2012). As an assumption, even though the UK consumers drink 165 million cups per day, this might be why tea sales have been trending downward in recent years. This is how ACME can provide value: through lower pricing on ACME tea products whilst also satisfying consumer needs. ACME tea has always provided top quality tea at prices that are affordable. Pricing must therefore be an emphasis in promotion. Since most tea sales occur through hypermarkets and supermarkets in the UK (Data Science for Research), consumers are used to pricing promotions and have come to expect them. Also, with tea being a sign of class and sophistication, ACME’s quality focus will provide value and satisfy consumer needs. The Ceylon teas produced in Sri Lanka are considered the best and cleanest teas in the world. The Ceylon Orange Pekoe variety has a rating of FTGFOP in the global grading scale which is often called far too good for ordinary people by avid tea drinkers. By focusing on promoting the high quality product benefits, tea drinkers that find tea to be a social status builder will be more attracted to the brand. 5.0 Differentiation and positioning ACME must, as in its home market, differentiate and position in terms of quality. Tetley has this focus as well, but with more emphasis on innovation and new product launches. To successfully differentiate, a product must be perceived by consumers as being different and must provide a sense of unique value (Aaker 2001; Carpenter, Glazer and Nakamoto 1994). Folgers, a major global coffee brand, differentiates with its flaked crystals emphasis (Carpenter, et al.). To successfully differentiate, ACME must identify product attributes that are different from other tea marketers. With quality as the positioning strategy, what will make ACME stand out from competition are its certifications. ACME will build partnership with the Sri Lanka Tea Board. The Board was established in 1976 and has three divisions: the Tea Control Department, the Tea Propaganda Board and the Tea Research Institute of Sri Lanka (SLTB 2011). The Board performs a very hard inspection process on producers that want to be certified by the SLTB. If producers pass this inspection, they are granted the use of the Tea Board certification logo. This is a sign of quality and compliance to quality standards. Figure 1 illustrates the logo that will help to differentiate and position ACME among competitors. Figure 1: Sri Lanka Tea Board Certification Logo 6.0 Consumer communication strategy The positioning strategy and value proposition will follow the AIDA model of communications. This involves creating awareness, building interest, creating desire, and making consumers want to take action as a result. In marketing it is necessary to gain immediate consumer attention. For a company with no brand recognition (ACME), starting communications using a company logo is not effective because consumers will not care (Rawal 2013). ACME will gain this attention by recruitment of a respected and well-known celebrity in the use of television advertisement. ACME will hire famous chef and food critic Nigella Lawson. Lawson has many top selling cookbooks, has been the host of the cooking show Nigella Bites, and sells cookware in a business worth £7 million. Lawson is known for her sensuality and sophistication (Sands 2006) which makes her ideal for catching consumer attention. Figure 2: Nigella Lawson as celebrity endorser Source: BBC. (2014). Nigella Lawson. http://www.bbc.co.uk/food/chefs/nigella_lawson This important celebrity endorser will reinforce the top quality of ACME teas. Not only is attention gained in this way, but trust is built in the brand when endorses are expert and attractive (Pornpitakpan 2003). To gain interest, the celebrity advertisements will show, using emotions, that the product is a great bargain for the level of quality. The soft drink brand Fanta used a concept showing a girl in her room, acting bored. Later, a boy enters holding a Fanta drink and they suddenly begin jumping for joy. Eventually, the camera pans to a city scene where everyone is celebrating whilst holding Fanta products (Rawal 2013). ACME will benchmark this type of concept to build interest and desire with the intent of motivating consumers to make a purchase. The advertising concept will feature a group of stuffy mid-aged tea drinkers, dressed in Victorian-era clothing in the middle of a modern restaurant. These actors will be surrounded by more youthful modern consumers who are making bad faces at the conventional drinkers. Nigella Lawson will enter the restaurant with a decanter marked with the ACME logo, throw the tea setting off the table of the stuffy tea drinkers, and force them to drink ACME. Whilst Lawson states what a great value and quality the product is, suddenly the Victorian actors find their clothing has changed to ultra-modern style in a flash. A celebration begins. Figure 3: Concept for advertisement under AIDA model Along with these television concept ads, ACME will be using traditional communications such as billboards, radio advertisements and promotion in cooking and food magazines. This will gain the attention of the mass market and build brand recognition in this new market. It is assumed that blending the logo which has traditional design with modernism will gain mass market attention. 7.0 Pricing ACME will use two pricing strategies during launch. The first is the penetration pricing strategy. This method puts the product at lower prices than main competition and is raised when market share increases (Monroe 2003). Penetration pricing gives consumers incentive to buy the product. It is believed once they taste the quality of the product, it will be easier to use premium pricing in 2015 after brand awareness is built and preference in key markets made. The pricing structure during the six month launch phase is as follows: Loose leaf box – 0.2 kg £3.69 Loose leaf box - 0.35 kg £4.99 80 Count Bag Box £3.19 40 Count Bag Box £2.69 Upon the end of the launch phase, pricing will be adjusted to more competitive structures aligned with such products as Tetley. The average price of Tetley’s 240 count bag box is £5.99. The second strategy is to use price promotions. Dawes (2004) states that price promotions are successful and it is often how quality is judged by consumers. At the retailers carrying ACME Tea, in-store coupons will be available for use. There will also be cents-off coupons in local mailers (direct mail) that gives more incentive to try the product. It will be very important for building a brand identity that ACME focus strongly on pricing. It is price that will differentiate as well as the quality certifications given by the Sri Lanka Tea Board. 8.0 Distribution The product will be exported from Sri Lanka via cargo vessels and air freight in volume purchases after inspection by the Sri Lanka Tea Board. From there, the primary mediums will be the hypermarket and supermarket. Stores such as Sainsbury’s, Morrison’s, ASDA, Tesco and Wal-Mart will be the primary retailers. Because ACME does not yet have brand recognition it would not be a good idea to explore ready-made products or attempt to create teahouses under the ACME name. This would be expensive, involve too much capital expense, and would likely not give a good result for revenues. Main supermarkets carrying the product will also be involved in promotion under co-branding agreements. It will be ACME’s hope to gain endorsement from trusted supermarkets that have loyalty in their consumer markets. ACME Teas will also be part of these supermarket loyalty programs during the launch phase to build recognition. Promotions such as offering triple points on ACME Tea will be an incentive. According to literature, customers who use loyalty programs at major retailers develop strong feelings toward the business (Hart, Smith, Sparks and Tzokas 1999). These statistics will be shown to supermarket retailers to get ACME to become part of their loyalty program. It will be of same benefit for both the company and the retailer to participate in a short term campaign to build brand awareness and improve the loyalty of important retail partners. Once the product has reached ports in the UK, it will be transferred via roadway transportation which is cost effective. Most of the supermarkets in the UK are in larger cities and there is a good roadway infrastructure in the country. If it is found that train systems provide cheaper logistics, this will also be considered. 9.0 Metrics Measuring campaign effectiveness is important for ACME. The company will be setting up different metrics that will show whether brand recognition is happening well. These will include several different methods. First, ACME will do market research. Quantitative surveys about customer experiences with ACME Tea will provide important information. It will help in learning about their perception of quality, taste and price. If there are any common beliefs and attitudes found, it will give new pricing strategies, product variety for distribution and help in changing the value proposition if needed. These surveys will be done outside of major supermarkets approximately two months after the launch of the integrated campaign. If it is discovered that brand preference has been built, pricing will be adjusted to premium status due to quality and loyalty. Second, ACME will track coupons. Retailers carrying ACME products will return the coupons for reimbursement by ACME. This will show which retailers that buyers prefer and how much of the product is actually being sold under the promotion. If there is more interest in certain areas of the UK or with certain supermarkets, advertising will be focused in places where demand levels are lower. Finally, ACME will conduct financial analysis. This will include watching sales numbers throughout the whole launch period. Also, it will be important to watch inventories to schedule new production and shipment to the stores. 10.0 Innovation in marketing ACME will use modern marketing tactics as well to gain brand recognition and hopefully brand preference over competition. In the stores, representatives hired by ACME will have free product sampling. These representatives will have small tables where tea is being brewed and offered to consumers with coupons for discounts. ACME will also have a tea loyalty program brochure that is given to buyers. It will invite consumers to return five receipts showing that ACME has been purchased for a rebate of £2. ACME will have an on-staff representative handling these mailings and delivering rebate checks to consumers. This program will run over a six week period after launch of the product into the UK. In certain cities, ACME will get local council approval to conduct guerrilla marketing. A funny script will be created by the marketing division. This script will involve actors promoting ACME tea and taking the product into the streets of such cities as London and other large urban areas in the country. The contract with Nigella Lawson will include appearances in at least two guerrilla marketing sessions. This will give consumers much more interest in becoming engaged with the brand. This strategy will also build quick awareness of ACME. 11.0 Financial projections The following is what ACME expects to achieve between August 2014 (launch date) and August 2016. Sales Date £1.2 million Launch – August 2014 thru February 2015 £4.5 million March 2015 – August 2016 The adjustment in revenues earned between February 2015 and 2016 is based on brand recognition and preference in some key markets. The ability to use creative marketing in a way that captures attention and interest will drive better sales results throughout the country. The current currency exchange rate in Sri Lanka is very favourable for making profit. One British Pound is worth 218 Sri Lankan Rupees. This will reduce many operating expenses of exporting and manufacture within Sri Lanka. It is estimated that it costs only 355.02 rupees per kilogram of production in Sri Lanka. With this exchange rate, it will only cost approximately £1.63 that includes cultivation, transportation, labour and exporting costs per kilogram. This means during launch, outside of administrative and marketing costs, a profit margin of at least 60 percent per box sold (depending on size and volume of the package). 12.0 An essay on using the web Goodson (2011) shows that Apple, Inc. has been very successful in using the web to build relationships with customers; a promotional tool. Apple has used the web successfully because it is a tool for building trust in the brand and its quality and improve brand visibility and construction of a positive brand personality. Apple has active representatives on Facebook and other social media sites that talk with important consumers. This shows excellence in service and also promotes that Apple really cares about their buyer markets. From time to time, executives and developers at Apple hold web-based discussions and show videos of new innovations happening at Apple. This grabs their attention and creates desire under the AIDA model of communications. The Dove soap brand by Procter & Gamble also used the web in promotions to gain consumer interest and further create brand preference through promotion. The company placed billboards around cities in the United States showing older women. The billboard invited consumers to visit a website or text their feelings about whether the women were beautiful. Young women and older women alike were shown on different billboards. The campaign engaged consumers, which is very important in gaining their interest and even loyalty. According to Schiffman and Kanuk (2010) consumers are strongly driven towards brands based on their stereotypes. Dove’s campaign allowed consumers to use the web to become interactive and express their emotions about what actually made up human beauty. Dove’s presence on the web gave consumers a chance to express their values in real-time, with real representatives also on social media. Values are considered to be “enduring beliefs” that strongly impacts purchase decision-making for some products (Tam 2004, p.903). This gave Dove much more promotional visibility and probably even some level of loyalty for consumers who have strong stereotypes about beauty. The company BMW, under its “Dream it, build it” campaign, used the web to take orders from customers (BMW 2014). This improved promotion of the luxury brand. Using web software on the website, customers were able to design their own cars, choose their colours, and select certain interior and exterior features. As they made these decisions, pricing was adjusted showing step by step what the consumer could expect. They finally placed the order with manufacturing once satisfied with their choices. This was certainly a successful promotional tool and was quite different than other offerings from competition in a very saturated market. The Dream it, build it campaign was heavily promoted to get consumers interested in making purchases online. This is important in an environment where labour and facilities costs (dealerships) are very expensive. It also showed BMW’s focus on quality and innovation which is important for premium product brands. There is a phenomenon in consumer behaviour known as conspicuous consumption. This is where consumers buy high priced, top quality premium products to improve their social status (O’Cass and McEwen 2004). BMW used the web to appeal to these needs. Using the web to create a custom vehicle would fuel a great deal of word of mouth and likely bring more high resources consumers to BMW over that of other luxury competition. Because many luxury features on cars are standardised from manufacturer to manufacturer, it is difficult to differentiate. The web was an excellent forum for engaging consumers, allowing them to improve their social status, and become creative contributors to the brand. As Goodson (2011) pointed out, it is necessary to build relationships in order to gain consumer loyalty. Analysis of the different web strategies from Apple, Dove and BMW shows they were definitely innovative. However, they were not disruptive innovations. Theory states that a true disruptive innovation should completely displace an established market or transform it (Frankelius 2009; Christensen and Raynor 2003). Dove managed to improve its brand personality through the web-based campaign, but did not alter the behaviours or activities of competition. Apple certainly gave its brand better promotion by being interactive, but it did not force changes upon such competition as Samsung. BMW gave consumers a new and unique method of ordering and searching for vehicles, but the innovation did not force changes upon competition in the established market. If these web strategies shown had been real disruptive innovations, competition would have had to change operations in order to stay competitive or keep market share. For example, if BMW had included the ability to actually watch their ordered cars being produced in real-time web video, other luxury automakers might have had to include this in their service model. Customers who could actually be a part of the producing process would build much more consumer interest. Maybe consumers would even grow so used to this that they demanded it from other luxury brands. It is only when an activity forces competitor changes to their strategies and business models that an innovation becomes really disruptive. Dove might have been able to create a genuine disruptive innovation by using a different web strategy. For example, allowing customers to have home delivery of their soaps over the web could have been disruptive. If enough promotion was used, Dove could begin pulling its products from shelves in stores and making it only available under an exclusive company website. This would mean that customers loyal to Dove would have to get the product directly. It might make the brand seem like a premium brand which would allow for higher pricing models. When a product has loyalty, consumers are usually willing to pay higher prices (Chaudhuri and Holbrook 2001). The web could have disrupted the market by putting a new luxury-type product category into competition. This would force competition to change their positioning strategies, formulas, or other important factors that allowed them to compete with Dove when it was just a regular consumer brand. This type of situation would have been a true disruptive innovation. References Aaker, D.A. (2001). Strategic market management, 6th ed. John Wiley & Sons. Bergin, T. (2012). Special report: How Starbucks avoids UK taxes, Reuters. [online] Available at: http://www.reuters.com/article/2012/10/15/us-britain-starbucks-tax-idUSBRE89E0EX20121015 (accessed 13 May 2014). BMW. (2014). Build your own. [online] Available at: http://www.bmwusa.com/standard/content/byo/default.aspx (accessed 17 May 2014). BrandsTell. (2011). Tetley. [online] Available at: http://brandstell.com/index.php?cmd=history_brand_news&lang=en&brand=Tetley&id=188 (accessed 17 May 2014). Carpenter, G.S., Glazer, R. and Nakamoto, K. (1994). Meaningful brands from meaningless differentiation: the dependence on irrelevant attributes, Journal of Marketing Research, 31(August), pp.339-350. Chaudhuri, A. and Holbrook, M.B. (2001). The chain of effects from brand trust and brand affect to brand performance: the role of brand loyalty, Journal of Marketing, 65(2), pp. 81-93. Christensen, C.M. and Raynor, M.E. (2003). The innovator’s solution: creating and sustaining successful growth. Harvard Business School Press. Dandotiya, R. (2012). Tea, Chitkara School of Hospitality. [online] Available at: http://www.slideshare.net/RaviDandotiya/tea-14795097 (accessed 14 May 2014). Data Science for Research. (2014). UK Tea Market. [online] Available at: http://www.theresearchpedia.com/research-articles/uk-tea-market (accessed 14 May 2014). Dawes, J. (2004). Assessing the impact of a very successful price promotion on brand, category and competitor sales, Journal of Product and Brand Management, 13(5), pp.303-314. FAO. (2014). Statistics: Tea (including mate), Food and Agricultural Organization of the United Nations. [online] Available at: http://faostat3.fao.org/faostat-gateway/go/to/download/FB/*/E (accessed 16 May 2014). Frankelius, P. (2009). Questioning two myths in innovation literature, Journal of High Technology Management Research, 20(1), pp.40-51. Goodson, S. (2011). Is brand loyalty the core to Apple’s success?, Forbes. [online] Available at: http://www.forbes.com/sites/marketshare/2011/11/27/is-brand-loyalty-the-core-to-apples-success-2/ (accessed 12 May 2014). Guerty, P.M. and Switaj, K. (2004). Tea, porcelain and sugar in the British Atlantic world, OAH Magazine of History, 18(3), pp.56-59. Hart, S., Smith, A., Sparks, L., & Tzokas, N. (1999). Are loyalty card schemes a manifestation of relationship marketing? Journal of Marketing Management, 15, pp.541–562. Hossain, M.M., Karim, R., Begum, S., Islam, G.M.R. and Hoque, M.M. (2013). Assessment of microbial load in made tea and antimicrobial property of made tea infusion, International Journal of Public Health Research, 3(2), pp.276-281. Mills, R. (2012). Wholesale price of tea jumps up to 41 percent, Yahoo! UK News. [online] Available at: https://uk.news.yahoo.com/wholesale-price-tea-jumps-41-194227308.html#tNsu32x (accessed 14 May 2014). Monroe, K.B. (2003). The pricing strategy audit. Cambridge: Cambridge Strategy Publications. OCass, A. and McEwen, H (2004). Exploring Consumer Status and Conspicuous Consumption, Journal of Consumer Behaviour, 4(1), pp. 25–39. Pornpitakpan, C. (2003). Validation of the celebrity endorsers’ credibility scale: Evidence from Asians, Journal of Marketing Management, 19(1), pp.179-195. Porter, M.E. (1985). Competitive advantage: creating and sustaining superior performance. The Free Press. Poulter, S. (2013). Costa, the coffee chain that keeps on growing: brand to open hundreds more stores across the UK and around the world, Associated Newspapers – Mail Online. [online] Available at: http://www.dailymail.co.uk/news/article-2317419/Costa-coffee-chain-keeps-growing-Chain-open-hundreds-stores-UK-world.html (accessed 15 May 2014). Rawal, P. (2013). AIDA marketing communication model: stimulating a purchase decision in the minds of the consumers through a linear progression of steps, International Journal of Multidisciplinary research in social & management sciences, 1(1), pp.37-44. Sands, S. (2006). I don’t want to be some kitchen blow-up sex doll, Daily Mail. [online] Available at: http://www.dailymail.co.uk/femail/article-420003/I-dont-want-kitchen-blow-sex-doll.html (accessed 13 May 2014). SLTB. (2011). Tea Promotion Division, Sri Lanka Tea Board. [online] Available at: http://www.pureceylontea.com/index.php?option=com_content&view=article&id=134&Itemid=220&lang=en (accessed 13 May 2014). Schiffman, L.G. and Kanuk, L.L. (2010). Consumer behaviour, 10th edn. Prentice Hall International. Tam, J.L.M. (2004). Customer satisfaction, service quality and perceived value: an integrative model, Journal of Marketing Management, 20, pp.897-917. Tea Infusion. (2008). History of Tetley Tea. [online] Available at: http://www.teainfusion.com/brands/history-of-tetley-tea.html (accessed 14 May 2014). Wallop, H. (2011). Espresso cups outsell mugs, The Telegraph. [online] Available at: http://www.telegraph.co.uk/foodanddrink/foodanddrinknews/8884198/Espresso-cups-outsell-mugs.html (accessed 16 May 2014). Whitbread. (2014). Whitbread PLC annual report and accounts 2012/2013. [online] Available at: http://www.whitbread.co.uk/content/dam/whitbread/pdfs/investors/reports-and-presentations/annual-reports/2013/10052013-annual-report-and-accounts-201213/Annual-Report-and-Accounts-2013.pdf (accessed 13 May 2014). Read More