Marketing strategy of ACME Tea and the Marketing Mix - Assignment Example

Marketing Management Part One: ACME Tea Background ACME Tea is based in Sri Lanka and manufactures a range of special teas. Joe Blogs, founder of thecompany is a highly qualified tea taster and has been a part of the tea industry for decades. The headquarters of the company is located at Ceylon. ACME Tea manufactures its products from the best tea plantations of Sri Lanka. Every batch of tea is personally checked by Mr. Blog. The tea is manufactured in a traditional manner without blending. This helps preserving original flavours of the tea. The quality of tea is kept very high through careful inspection and monitoring of the production processes. The company employs adequately talented workers who are involved in the manufacturing process. Quality checks are regularly done by company’s managers. The company presently caters only to the Sri Lankan markets. The company has been operating in Sri Lanka for last five years and has been highly successful. ACME tea has gained popularity in the markets of Sri Lanka because of its rich tastes and flavour. Since the company does not indulge in blending the tea, aroma and richness of the tea lasts longer. ACME Tea has been successful at capturing adequate market position in last few years in Sri Lanka. As products are of such high quality, the company invests very little in promotional activities. The company also gives special emphasis upon packaging of the tea products so that quality and freshness of the products lasts longer. Mr. Blog ensures that the tea is produced in most sustainable manner possible with minimum wastages and environmental impact. Such sustainable practices of the company have given it more popularity in the markets. ACME Tea has been successful at generating adequate amounts of revenue through operations in the market of Sri Lanka. Over years, the company has expanded effectively. ACME has, hence, decided to expand its market to other nations as well. The company has come up with a plan to trade in the UK. The company has limited resources in terms of expanding on a global scale. Mr. Blog is confident about the fact that even though the company lacks high trading experience, it can gain adequate market share in that of the UK through a proper marketing and trading plan. The superior quality of company’s products is sure to attract a large number of consumers. The following plan has been developed by the company for venturing into markets of the UK. Target market In order to successfully meet the needs of consumers, it becomes essential to identify target market segment and their nature. ACME must investigate the market conditions before drawing up a suitable marketing plan. The target market segment involves analyzing size of the target market, their span, strategies to attract and retain target market segment and so on and so forth. If the target market segment is large, it is possible for the company to earn higher revenues. However, if the target market is small, the company is likely to have a niche marketing segment. Accordingly based on the market size, the company is required to adopt suitable marketing strategies (Hiebing and Cooper, 2000). The Tea industry of UK is well-developed with a number of firms. The tea industry has grown by 8% from 2010 to 2013. In general, it is observed that there is shortage in supply of tea in markets of the UK. As a result, prices of tea have remained high. The UK tea market is largely characterized with consumers belonging to the age group of above 40. Most of the tea drinkers belong to this age group and account for maximum consumption of tea. People belonging to the age group of 15 to 40 consume less tea. They are seen to have tea, alongside of breakfast only. This age segment comprises largely the consumers of coffee. In general, tea is mostly served in restaurants as well as in homes during breakfast and account for 99% of the sales value of tea. The younger generation is seen to move away from tea towards other beverages. Hence, target market segment of the company is largely adults who are above 40. This segment of the population is usually quite large in number. So, target market of the company is large and widespread (Cohen, 2006). While analysis and determining the strategies for the target market, it is essential to conduct business environmental analysis using models such as PEST (Appendix 2). Customer needs and values The overall consumption rate of tea has fallen in the UK markets in last few years. The increase in prices has been considered to be the primary reason behind fall in sales of tea in the UK. Amongst different beverages, black tea dominates the market. Green tea and herbal tea are also slowly gaining popularity amongst the people. Tea is mostly sold in supermarkets and hypermarkets. Quality is an essential aspect that consumers look for while purchasing tea. Consumers are seen to not change their preferred brand of tea from time to time. It, therefore, becomes challenging for new firms to enter into the market. It takes a considerable amount of time for consumers to familiarize themselves with new brands and to start purchasing the same (Stevens, 2005). In order to meet consumer needs in a better manner, it is essential to understand their expectations from the different products. Buying decision of consumers is driven by a number of factors. The pattern of buying is also highly differentiated based upon their lifestyle ad tastes. Many consumers are seen to purchase only branded items. Such consumers generally buy same brand of tea repeatedly. Consumers are also influenced highly by reputation of brands existing in the markets. Word-of-mouth influences consumer buying behaviour adequately (Wood, 2008). ACME Tea is of superior quality and it is expected that the company will be successful at generating high revenue in the UK markets. Since the UK market is driven by high quality products, it would be comparatively easier for ACME to establish a brand image in the market. Market differentiation and positioning ACME is a brand of tea origination from Sri Lanka. Asian tea is known for its high quality and superior taste. This sets ACME’s products distinct from existing brands in the UK. ACME also manufactures its products in the most traditional manner. When tea leaves are processed in a traditional manner, it helps in retaining aroma and quality of the tea. There are very few brands of tea in the UK providing similar features. Apart from regular tea, the company will also be offering green tea to the consumers. A rising demand for herbal and green tea is observed in markets of the UK. A large section of the society is becoming increasingly concerned about their health conditions. This has driven many individuals to consume green tea. In the coming few years, consumption of green tea is expected to rise considerably (Westwood, 2013). It is important for the company to ensure that consumers develop the right perceptions about products of the company. For this, it becomes essential to carefully plan the promotional strategy and communication message. Market communication and promotion Promotional activities are strongly encouraged while entering into a new market. Being a Sri Lankan originated brand, ACME has no popularity in the western nations. In order to make consumers aware about existence of the company in global market, suitable promotional strategies must be undertaken. While entering a new market, one of the most common promotional tools adopted is newspaper advertisements. Through newspaper advertisements, it is possible to reach a large section of the society. Another popular means of promoting products is through television advertisements. Most of the popular brands in the UK tea industry are frequently seen in television advertisements. Television advertisements are an effective way of attracting consumers. ACME possesses limited financial resources. Therefore, it might not be possible for the company to adopt television advertisement as a promotional tool owing to high expenses. The company may, however, consider the same after gaining sufficient popularity in the market and in turn generate sufficient revenue. Alternatively, the company can adopt strategies such as, distribution of free samples, distributing pamphlets, newspaper and magazine advertisements (Zimmerer, Scarborough and Wilson, 2002). It is important to carefully decide upon information that the company wishes to communicate to the market through such promotional tools. Since strongest aspect of the brand is its superior quality, the company must put special emphasis upon it. It is seen that consumers in the UK do not hesitate to purchase foreign brands of tea, especially those from Asia (Kerin, Hartley and Rudelius, 2007). Pricing strategies ACME will adopt the penetration pricing strategies while entering markets of the UK. Penetration pricing strategy helps in capturing market by entering into the same with relatively low prices as compared with the competitors. The motive of such a pricing strategy is to generate awareness regarding the product and motivate people into buying the same. By offering low prices, consumers are attracted and adequate sales levels are attained. Penetration pricing is largely adopted by those firms, which are new to the market and require creating adequate market base. Through such pricing policies, it is possible to attract price sensitive consumers. A major section of the consumers are considered to be price sensitive and are driven by low priced and good quality products. Price sensitive consumers are not, in general, brand conscious. Once the brand is successful at creating adequate awareness in the market, the company refrains from penetration pricing policies. After establishing proper market base and more or less stabilizing flow of revenue, the company may consider raising prices of the products at a very slow rate (Changchien and Lin, 2005). It is usually a loss for firms to stick to the penetration pricing policies for a very long time. Penetration pricing is believed to be similar to the economy pricing method whereby the product prices are minimized. One of the issues with penetration pricing strategy is that firms find it challenging to raise the prices after a considerable period of time. When the prices are raised, there is a fear of losing price sensitive customers. It is important for the organization to, therefore, increase the level of prices at a very slow rate. A gradual rise will not strongly affect consumers. It might also get overlooked by many consumers (Moore, 2008). Customer relationship and retention Contemporary markets are extremely competitive with a variety of goods and services. Globalization and technological growth have helped companies to have a global reach. Consumers give more importance to convenience rather than prices. Good quality products at fair prices enjoy greater preference. Brand loyalty has significantly reduced as consumers keep shifting to newer brands and production with the advancement of technology. Consumer tastes and preferences have been constantly changing. So, it becomes extremely complex for organizations to retain consumers. Providing customer satisfaction becomes a challenging task for most organizations under such market circumstances. It is imperative for ACME to correctly perceive needs of the consumers. When needs are rightly matched with the products offerings, customers are rendered highly satisfied and they are retained with the brand for longer. Price and quality of the product are two most essential aspects, which influence purchasing pattern of the consumers. Another strategy followed by most organizations for retaining customers is that of constantly developing their products and making innovative changes in the same (Moriarty, Mitchell and Wells, 2009). Offering timely and good customer services also prove to be effective in retaining customers. Many organizations at present are seen to take special measures for developing better relationship with consumers. Consumers are encouraged to provide valuable feedback on services provided by the company. Companies may also ask consumers to provide product reviews on their official website. Many of such reviews are also printed on packaging of the products. This acts as an influential strategy upon other consumers. In addition, consumers’ real life experiences help in creating a greater impact upon the minds of other consumers regarding quality of the products (Kotler, 2011). Establishing control It is essential for ACME to establish adequate control over company’s resources so that cost of operations is minimized. Proper control over resources also helps to minimize wastages. A good plan of control helps firms to strategically allocate resources. ACME is entering into the UK market with very limited resources. Under such circumstances, it becomes extremely necessary for the company to budget its expansion plans. Budgeting is required for proper cash management, investment in assets, different types of projects, marketing activities and distribution activities. For entering into the UK markets, ACME requires to invest hugely in distribution and marketing related activities. In case of distribution activities, the company will have to incur the cost of exporting tea from its main manufacturing location in Sri Lanka to markets in the UK (Reinartz and Kumar, 2000). Additionally, the company will have to supply its products to the different stores and hyper markets. ACME is also required setting up its own customized stores across the UK, selling its products exclusively. ACME also needs to suitably plan its marketing ventures. It must be ensured that measures taken by the firm for enhancing popularity of the brand is productive and are able to assist the company in earning sufficient amount of revenues (Vargo and Lusch, 2004). Corporate social responsibility Consumers are largely seen to appreciate those firms, which engage themselves in corporate social responsibilities. A company is a part of the society. It uses resources available from the society as well as the environment in order to produce different types of goods and services. Corporate firms have certain responsibilities towards the society such as, providing with proper and high quality products and services as well as ensuring that no damage is caused to the environment. Companies should also engage themselves with charitable and social welfare activities. Organizations that actively participate in social welfare activities are able to gain greater goodwill in the society. Overtime, such firms become successful at building trust with the consumers and their revenues increase considerably. Corporate social responsibilities must not be undertaken only with the view to gain profits in future. Such activities must be conducted so that positive returns can be provided to the society and environment. Unless the society functions well, firms cannot grow (Gronroos, 2000). Distribution strategies A good distribution strategy is essential for meeting consumer requirements on time. ACME should make sure that fresh products reach the market without delay. The distribution strategies must be framed in such a manner that the orders are replenished within adequate time so that products do not go out of stock. Consequently, the company needs to properly analyze the lead time for re-ordering, minimum stock levels to be maintained and lead time required for bringing in new stock. The time required for transportation must also be suitably taken into consideration. The supply chain developed by the company should be cost effective as well as prevent wastage of time due to goods in transit. The company considers setting up a packaging facility in the UK. The location of the facility is required to strategically chosen so that it is not very far from the market areas. A suitable transportation network must be set up between the production facility and shops where the products will be sold. Retailers who would be selling the company’s products must be carefully selected. The super markets and shops selling ACME Tea should be located in or nearby main city areas so that the potential customers remain to be high in number (Kozinets, 2002). SWOT analysis The strongest attribute of ACME Tea is its high quality and strong aroma. Very few tea brands in the UK produce tea in the traditional manner. This gives ACME a competitive edge over other existing brands. The traditional way of manufacturing tea also allows ACME the opportunity to considerably minimize cost of production. As a result, the company can sell its products at a low price. This gives ACME a competitive edge over other firms. ACME would be entering the UK markets as a small firm with limited resources. This might pose as a potential weakness for the company. The UK markets are dominated by big tea companies such as, Tetley, R. Twining, Unilever UK and Typhoon Tea. It would become difficult for ACME to face competition from these companies with limited amount of resources (Kotler and Armstrong, 2010). The company requires overcoming these by providing high quality products, thereby attracting larger number of customers. There are very few firms existing in the UK, which sell tea of Asian origin. This aspect acts as an opportunity for the company. Changes in trade policies increase taxes and economic meltdown may act as potential threats for ACME. Part two: Web and the marketing mix This part of the essay analyses implications of web technology upon the marketing mix “place”. The web has helped in creating a virtual global market place, where almost anything and everything can be brought or sold. Most organizations of the present day world are seen to engage themselves with web based marketing. Organizations despite their size can engage in the web based trading. This gives even the small firms an opportunity to sell their products on a global scale. The web based selling and marketing system revolutionizes the concept of “place” in a marketing mix. The concept of web based marketing has been discussed from different viewpoints as follows. Economical marketing strategy The web based marketing strategies are highly economical. With the help of adequate software and support of the internet, companies can reach out to any consumer of the world. The web based marketing system enables small and medium sized firms to reach out to international markets, which otherwise would have been an expensive venture. At a very low cost, it becomes possible for firms to inform consumers all over the globe regarding its products and services. This gives business entities an opportunity to go global. Setting up physical markets for products in different nations of the world involves immense investments. Products are required to be transported to supermarkets and hyper markets located in different parts of the world. Firms also need to set up shops selling their products exclusively. Compared to such ventures, displaying products on the web is considered as a relatively cheaper means of marketing. It becomes necessary for firms to set up a website or associate themselves with online shopping sites and sell their products. Web based marketing is, therefore, highly cost effective and economical (Vorhies and Morgan, 2005). Market span Firms that do not indulge in web based marketing can only sell their products at a few places. This hinders growth of the firm globally. Web based marketing system provides many business firms with an opportunity to establish themselves in different world markets, without limiting them to only a few. The global reach helps firms to attract greater number of customers. There are many types of products, which although lack adequate market scope in some nations, might have huge market potentials in other nations. Web based marketing helps firms to tap such unidentified markets. As web based marketing helps firms to sell products to a larger number of consumers, many firms are seen to adopt such strategies for growing their businesses. International business opportunities help firms to attract greater investments (Boone and Kurtz, 2009). Technological advancement Web based marketing is dependent upon advanced software technologies. As a consequence, investment in technology becomes essential for web based marketing. Globalization has increased the interaction between business and consumers. It is nowadays possible for consumers to transact business at any given point with the help of internet technology. Web based marketing is, thus, only successful when there is adequate technological support. Opportunity for growth Aspects that rely upon technology are subject to frequent changes. Technological advancement have made web based marketing comparatively safer, simpler and convenient to use. Organizations can portray their products and services in an orderly fashion to different consumers and offer them adequate information about the same. Consumers can also very conveniently browse through company’s products and select the ones that suit them best. Payments are also made in highly convenient and faster manner. Over years, the manner in which goods and services are sold on the web has changed. Currently, online transactions have become safer and it is possible to compare between different products based on price and other features. The web provides adequate scope to companies for selling their products innovatively. Organizations can make their products highly attractive by showcasing them in different ways (Jain and Singh, 2002). Information Web based marketing provides an opportunity to organizations to incorporate a large amount of products and company information while communicating with consumers. When individuals walk into a store to purchase an item, they simply pick up the product and scan through its packaging and decide whether or not to purchase. Excessive time is not spent upon analyzing the products features. However, while purchasing products online, consumers are provided with adequate descriptions relating to products. Reviews regarding the products from other consumers are also made available to consumers at large. The increased visuals of the products attract larger number of consumers (Gummesson, 2002). Company information While purchasing goods physically from hyper markets and shops, consumers do not spend a lot of time in obtaining company related information. They simply opt for favourite brands as they consider having adequate information regarding the same. Brands that are less popular in the markets or less familiar with consumers are completely ignored. In web based marketing, when consumers purchase products from the company website, they are able to obtain adequate information regarding the company as well. It provides an opportunity for the companies to highlight their achievements and credits. This helps in increasing goodwill of the company (Kotler and Armstrong, 2010). Direct communication Web based marketing helps organizations to directly communicate with consumers by way of removing middle-men and other allied businesses. Organizations can directly supply their products to the consumers, thereby reducing costs of production to a minimum. Web based marketing is, hence, adopted by many small firms who cannot afford tie ups with other larger business entities. Small firms can easily reach out to customers through online marketing activities. This reduces cost that requires to be incurred for involving retailers and wholesalers. Consumers are can provide their valuable feedback directly to the companies. Therefore, through online marketing, a direct communication between consumers and organizations gets facilitated (Kotler, 2011). Reference List Boone, L. E. and Kurtz, D. L., 2009. Marketing contemporaneo. Connecticut: Cengage Learning. Changchien, S. and Lin, M. C., 2005. Design and implementation of a case-based reasoning system for marketing plans. Expert systems with applications, 28(1), pp. 43-53. Cohen, W. A., 2006. The marketing plan. New Jersey: J. Wiley & Sons. Gronroos, C., 2000. Service management and marketing: a customer relationship management approach. New Jersey: John Wiley & Sons. Gummesson, E., 2002. Relationship marketing in the new economy. Journal of Relationship Marketing, 1(1), pp. 37-57. Hiebing, R. G. and Cooper, S. W., 2000. The successful marketing plan. Chicago: NTC/Contemporary Publishing Group. Jain, D. and Singh, S. S., 2002. Customer lifetime value research in marketing: A review and future directions. Journal of interactive marketing, 16(2), pp. 34-46. Kerin, R. A., Hartley, S. W. and Rudelius, W., 2007. Marketing: the core. New York: McGraw-Hill/Irwin. Kotler, P. and Armstrong, G., 2010. Principles of marketing. New Jersey: Pearson Education. Kotler, P., 2011. Reinventing marketing to manage the environmental imperative. Journal of Marketing, 75(4), pp. 132-135. Kozinets, R. V., 2002. The field behind the screen: using netnography for marketing research in online communities. Journal of marketing research, 39(1), pp. 61-72. Moore, C. W., 2008. Managing small business: An entrepreneurial emphasis. Connecticut: Cengage Learning. Moriarty, S., Mitchell, N. and Wells, W., 2009. Advertising: Principles and Practices. New Jersey: Pearson Education. Reinartz, W. J. and Kumar, V., 2000. On the profitability of long-life customers in a noncontractual setting: An empirical investigation and implications for marketing. Journal of marketing, 64(4), pp. 17-35. Stevens, R., 2005. Trade show and event marketing: plan, promote & profit. Tennessee: South-Western Publishing House. Vargo, S. L. and Lusch, R. F., 2004. Evolving to a new dominant logic for marketing. Journal of marketing, 68(1), pp. 1-17. Vorhies, D. W. and Morgan, N. A., 2005. Benchmarking marketing capabilities for sustainable competitive advantage. Journal of Marketing, 69(1), pp. 80-94. Westwood, J., 2013. How to write a marketing plan. London: Kogan Page Publishers. Wood, M. B., 2008. The marketing plan handbook. New Jersey: Pearson Prentice Hall. Zimmerer, T., Scarborough, N. M. and Wilson, D., 2002. Essentials of entrepreneurship and small business management. New Jersey: Prentice Hall. Appendices 1. Market introduction tools The following marketing strategies were adopted for conducting the research for ACME Tea’s introduction in the market of UK. Environment analysis Suitability of the political, social, economical and technological environment for the growth of the business. Competition analysis Developing strategies so as to be able to effectively meet competition from other firm. Differentiating product and promotion strategies from the competitors. Market communication strategies Choosing apt communication techniques for the brand. The communication model must be chosen keeping in mind the needs of the market and the target consumers. Pricing tools The right pricing techniques helps a brand to gain greater popularity in the market. Pricing strategies include analysis of the prices adopted by competitors, company’s financial and marketing objectives for the short and long run. 2. PEST analysis for ACME Political Stable UK government. Economically supportive rules and regulations. Economical Less competition in the tea industry of UK due to low suppliers. High demand for tea. Social Tea drinking habit is high in the society. The society is open towards purchasing new types of products. Technology Company uses traditional methods of production. Therefore less concerns relating to technology. Read More