Tea Industry

11 Jan, 2018 Free Essays 0

| TAJ MAHAL TEA| | | 5th Sept. ‘11| A Marketing Analysis| | PG-B (2011-13)| | Abhiskek Rajan (#103)Kshitij Registrar (#121)Prateek Meharia (#138)| K. K. Srinivas (#118) Prashant Rathor (#137)Punit Rajmohan (#140)| | | | Contents INTRODUCTION2 Product2 Branding & Advertising3 Pricing4 Distribution & Retailing4 Segmentation5 Positioning6 Target Customers7 Environmental Factors Affecting Taj Mahal Tea8 Macro Factors8 Micro Factors9 Strategies for the Future11 Segmentation-Targeting-Positioning11 SWOT Analysis13 Brand Manager Interview15 INTRODUCTION

There are about 1,000 tea brands in India, of which 90% are regional players. According to industry experts, packet tea, being branded, has a prime advantage of assuring consistency of quality and guaranteed taste. Tea is the highest consumed beverage in the world after water. Tea Industry in India has an annual turnover of more than Rs. 10,000 crores. 80% of all beverage consumption in India is tea. Hindustan Unilever Limited (HUL) is the largest tea producer, not only in India but in the entire world. HUL’s total share of tea market in India is 31% and it is closely followed by Tata Tea with 26% share.

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Tea as a product has 95% penetration in India. Preferences for tea vary from region to region within the country with South India preferring strong and dark tea and North India being more inclined towards taste and aroma. 65% of the tea sold in India is loose tea and the rest is packaged tea. Taj Mahal Tea Taj Mahal Tea is a product of Brook Bond, the 130 year old brand from Hindustan Unilever Limited (HUL). It is the market leader in the premium tea market of India. It is considered as the gold standard of tea in India. It was introduced in the year 1966.

It is estimated to be worth more than 200 crores. Its main competitors are Tetley tea from the Tata Global Beverages and Society tea from Hasmukhrai & Company. Taj Mahal was the first in the country to introduce the concept of tea bags (for instant tea) and dessert tea. The USP of the brand is its rich taste and flavor, unique aroma, and choicest brand ambassadors. Taj Mahal is special because it is made from the rarest, freshest and juiciest tea leaves from among thousands. Even the brand ambassadors signify the true essence of Taj Mahal. Following is a brief understanding of Tata Tea Product

Taj Mahal was launched in 1966 by Brooke Bond. For over four decades, Taj Mahal has been the gold standard, i. e. premium segment, of tea in India. It has been a pioneer of innovations in the Indian tea market. First premium tea First to introduce tea bags First and only tea brand in vacuum packs First to usher in new formats and concept, like instant tea – Dessert Tea Today Taj Mahal is available in 2 forms: Packaged Tea Tea Bags – 4 variants in tea bags: Darjeeling Earl Grey Ginger Lemon Cardamom Branding & Advertising Taj Mahal Tea is positioned as a premium brand and associates it with quality ea. Taj Mahal Tea is said to be made from the rarest and the best tea leaves as experts go through a lot of rigor to ensure that only the best, freshest and juiciest tea leaves from a thousand go into every Taj Mahal Tea pack. The brand is said to give its consumer “the perfect sensorial experience that’s one in a thousand”. The principle idea behind all of Taj Mahal Tea’s advertisements is the tag line “Wah Taj”. The brand ambassadors – Ustad Zakir Hussain and Saif Ali Khan – have been promoting the uniqueness and quality of the taste of the tea.

HUL advertises this brand primarily through television as its appeal to the premium segment users. In order to convert tea drinkers to tea connoisseurs HUL has implemented the Taj Tea Trail. This is an hour long tea tasting and appreciation workshop conducted by an in house tea expert. The schedule of the program is as follows: Sample various teas in a guided tea tasting Learn the art of making the perfect cup Learn fascinating tea trivia Become a certified Tea connoisseur Leave with a Taj Tea Goodie Bag Enjoy traditional tea-time snacks Pricing Taj Mahal Tea being a premium segment tea is relatively expensive.

Packaging/Size| Cost (`)| Tea Leaves Pack (100 grams)| 38| Tea Leaves Pack (245 grams)| 96| Tea Leaves Pack (490 grams)| 192| Tea Leaves Pack (985 grams)| 380| Standard Tea Bags (10 pieces)| 12| Standard Tea Bags (25 pieces)| 35| Standard Tea Bags (100 pieces)| 112| Flavoured Tea Bags (10 pieces)| 40| Flavoured Tea Bags (25 pieces)| 80| Distribution & Retailing HUL’s products, manufactured across the country, are distributed through a network of about 7000 redistribution stockists covering about one million retail outlets. The distribution network directly covers the entire urban population.

HUL’s distribution network in rural India already directly covers about 50,000 villages, reaching about 250 million consumers through about 6,000 sub-stockists. Launched Project Shakti through which the company is able to extend its operations in over 12,000 villages spread across 8 states. HUL has also included several (NGOs and state governments) as the initiative helps rural women to improve their financial position. The general trade comprises grocery stores, chemists, wholesale, kiosks and general stores. HUL has set up a full-scale sales organisation, for supermarkets to serve modern retailing outlets.

Product tests and in-store sampling are provided to consumers. HUL also has forayed into Out-of-Home distribution wherein it has entered into an alliance with Pepsi Co. for setting up vending machine for hot beverages like tea and coffee. Currently Lipton Tea and Bru Coffee are being served through this medium. Taj Mahal Tea has several tie-ups with the hospitality industry including the commercial aviation industry. Jet Airways serves Taj Mahal Tea bags to its customers. Several premium hotels too have Taj Mahal Tea Bags kept in the guest rooms. Segmentation

The tea available in the market for consumption can be divided into three major categories: Premium – It is made from large whole leaves and flowering portion of the plant. Medium – It is made from either pieces of large tea leaves or small whole tea leaves. Economy – It is made from very small tea leaves and tea dust. Major Brands Premium – Taj Mahal tea, Yellow Label, Green Label, Tetley Temptations, Society Tea Medium – Red Label, Tazaa, Tata tea premium Economy – Tiger, Ruby, Agni etc Price (`/kilogram) Premium – 250-350 Medium – 150-200 Economy – 100-150 Segmentation of Taj Mahal Tea

Taj Mahal Tea has always positioned itself as “As elegant and wonderful as Taj”. The name Taj Mahal tea was selected so as to reflect the premiumness, elegance, excellence and rigour that is associated with the Taj Mahal. Their positioning strategy has been to convert tea lovers into tea connoisseurs. Tabla Maestro Ustad Zakir Hussain had been Taj Mahal Tea’s brand ambassador from the early 1990’s. Taj Mahal Tea was re-launched in July 2003 with a new baseline and world class packaging. The new makeover came after a change in the communication strategy in 2002-03. Taj Mahal Tea was positioned by HUUL as the best tea.

This “Hazaron Mein Ek” tea was promoted using the baseline “Wah Taj” and endorsed by the tabla maestro Ustad Zakir Hussain. But with the competition catching up in the form of Tata Tetley and the fear of young consumers moving away from the brand is causing a concern to HUL. As a result the brand underwent four makeovers and a change of brand ambassador. In the year 2007 Taj Mahal Tea appointed Saif Ali Khan as the new brand ambassador as an attempt to make the brand more contemporary. So the change in the brand ambassador is an attempt to make the brand relevant to the new generation.

The promotions went back to the “Wah Taj” with Saif Ali Khan promoting the uniqueness of the tea. In the future, Taj Mahal Tea should continue to position itself as a premium tea with extra emphasis on the health benefits that come along thereby drawing the youth who are more into coffee and other beverages. It should highlight the fact that the tea is made from highest quality tea leaves from the best gardens of the country, and having the tea is a subliminal experience. Positioning in the past| Current Positioning| Future Positioning| Premium, elegant, excellent and rigour. Premium, contemporary, modern, refined. | Premium, subliminal, healthy. | Target Customers The target group of customers of Taj Mahal Tea has always been tea lovers who want a wholesome tea drinking experience which includes factors like rich taste and flavour, unique aroma and tea variation. They also target people who want instant tea; people who are working and those who are on the move. Taj Mahal Tea can also be seen as new tea drinker’s tea as it has mass appeal flavours (ginger, lemon and cardamom). The age group of customers which Taj Mahal Tea targets are above 20 years.

Since, Taj Mahal is a premium tea and its price falls in the costliest range of tea available in the market, hence the customers are generally the people who earn medium or high salaries. Since 2006, the brand has undergone a makeover to make it more contemporary, sophisticated as well as refined and rope in the new generation. Hence the target customers have also expanded to the newer generation. Since by 2015, 55% of the country’s population would be under 25 years of age, so the target customers in the near foreseeable future should be “Young Adults”.

They should also target people who are health conscious and want to remain fit and healthy by advertising the health benefits that come along with great quality and taste. Product, Brand and Company| Target Customers| Benefits| Value proposition| Taj Mahal Tea, Brooke Bond, HUL| Health conscious consumers and people who thrive on the experience of having tea| Rich taste and flavorUnique aromaGood packagingBrand recallTea variations| A brand which offers supreme quality tea which is the best in the world with unmatched taste and experience. |

Environmental Factors Affecting Taj Mahal Tea Macro Factors The following macro-environmental factors which affect HUL and the demand/supply of Taj Mahal tea are as follows: Income Effect – Per-capita income determines the amount of tea consumed and type of tea consumed. While houses with low per capita income consume lesser costly tea, the houses with higher per capita income consume greater amount of costlier tea. Taj Mahal tea is a premium product hence its consumption will increase with increase in income and buying capabilities of consumers. Economic Growth – Businesses re greatly influenced by economic activities. The level of economic activity is measured by GDP (Gross Domestic Product). GDP is measured by amount of goods and services a country produces. When GDP falls, the demand for premium products decreases and people replace them with lesser costly products. Taj Mahal tea being a premium product, people will replace it with less costlier tea like Taaza, Brooke Bond Red Label. On the other hand with increase in GDP, the demand for Taj Mahal tea will increase as people will replace the less costly tea they consume with premium brands.

Inflation – With increase in inflation there will be increase in prices of products and services over the period of time. The disposable income of consumers remaining the same, the consumers will reduce consumption of costlier products and in the longer run replace them with cheaper products. Taj Mahal tea is one of the costly tea brands and hence in times of high inflation the consumers might replace it with lesser costly tea brands. Population and Habits – Population and habits of a region also determine the sales a product. South India consumes more coffee than tea and hence it determines the sale of tea in that region.

In regions having cold winter the demand for tea is more during winter. The demand for Taj Mahal tea is dependent on these factors. Trade Unions – Trade Unions are very strong in tea producing belts of India. They are constantly at logger heads with the entrepreneurs over issue of wages and hence they determine the amount of tea to be supplied to companies. * * * Micro Factors The following micro-economic factors which affect HUL and the demand/supply of Taj Mahal tea are as follows: Price of the product – Price of a product is major determinant which shapes its demand.

In the present market where the competition is intense, if price of a product is raised it will affect the quantity demanded for it. Taj Mahal tea is a premium product which is already costly. If its price decreases, the demand for it will increase as people will replace the cheaper tea which they were consuming with it and vice versa. Opportunity Cost – The opportunity cost represents what consumers must give up in order to buy something – in other words, the trade-off factor. What the consumer gives up, or trades off, to buy one thing and not another is the opportunity cost.

Prices changes in a product or service, either up or down, will influence the opportunity cost to consumers. A steep increase in the price of Taj Mahal tea for a confirmed tea drinker may not prevent that consumer from buying the same amount of tea. But for the random drinker of tea who does not need a cup or two to start the day, the price increase may cut that consumer’s tea buying. Elasticity – Elasticity of a product is defined as the percent change in quantity demanded with one percent change in independent variable. Independent variables which affect demand are income; price and price of related goods i. . close substitutes of the product. Price Elasticity – Taj Mahal tea is a premium product which is costlier than available tea brands in Indian market. If its prices are increased slightly it might not deter the regular tea drinkers to buy it but a significant change in its prices might force the consumers to switch to a lesser costly brand like Taaza. Income Elasticity – With increase in income, consumers replace inferior goods with superior goods and hence the demand for Taj Mahal tea will increase with the rise in income.

Cross-Price Elasticity – With the increase in price of its substitutes the demand for Taj Mahal tea will increase and vice versa. Distribution Channels – In Urban areas, shopping malls are gradually replacing the corner store. Rural areas are more price sensitive than their urban counter parts. In urban areas distribution channels must cater to the changing buying patterns and in rural areas HUL must make Taj Mahal tea available in smaller packaging which cost less. Marketing Strategies – Through marketing companies aim to create brand recognition and brand loyalty.

Advertisements play a big role in shaping up these perceptions. Taj Mahal tea is positioned as a premium product, hence a slight increase in its price won’t deter its loyalists from buying it. The reason behind it is: A consumer who has had a beneficial experience with a specific brand of product or service will most likely continue to purchase it, despite increases in its price – up to a point. Strategies for the Future Segmentation-Targeting-Positioning Segmentation Variable used to segment the market is Income Groups. Tea drinkers can be broadly divided into 3 classes of Income groups.

The low income class The Middle class The Upper income group The lower income group drinks tea to get energy, the middle class income group drinks it for relaxation and the upper class income group consumes tea for social reasons. Targeting: As Taj Tea comes in the Premium Tea segment we will target the The middle class income group The upper class income group consumer Targeting the Middle Class Income group: Members in this group range from young college graduates to mid-level government officials, traders and business people.

Although their budgets are stretched, they are generally avid tea lovers and don’t mind spending a little extra to get a better quality cup of tea. The primary reason for the middle class to drink tea is for relaxation. While drinking tea, as a habit, is deeply ingrained in India, consumer lifestyles and consumption patterns are evolving rapidly. In an environment increasingly dominated by cola wars and coffee bars, it is imperative to upgrade tea offerings for tea to remain a relevant and attractive beverage for consumers. In this segment the challenge is to convert tea lovers into tea connoisseurs.

Promotional activities and increasing the number of service outlets would be a step in this direction. Other steps like the tea appreciation workshops known as “Taj Tea Trails” conducted should be taken up more aggressively. Each session help the consumer to appreciate the finer aspects of tea. This category is critical because it has members like students and young professionals that might get into the upper class income group in the near future. HUL should focus their attention on proper branding of Taj and should try to create a brand loyalty among these consumers. Targeting the Upper Class Income group:

The upper end of the middle class, tend to be senior government officials, managers of large businesses and other professionals. Successful and upwardly mobile, they are highly brand-conscious and likely to ready to pay more just for a better experience. Forming Strategic alliance and branding will be the most critical aspects when it comes to targeting the Upper Class Income group. Tie ups with five star hotels, airlines, trains like Rajdhani and Shatabdi etc to supply premium quality tea to this segment of the market. Taj should also leverage its unique brand image in capturing the attention of the huge population of Indians outside India.

The brand can appeal to their emotional side and also provide a unique Indian experience outside India. Branding will play a very important part in establishing this connects. As far as branding is concerned its brand ambassadors personify the essence of Taj Mahal. Taj Mahal’s first brand ambassador, Ustaad Zakir Hussain, is a symbol of excellence in the field of music. Through his rigor, perfection and talent it gave a Taj Mahal a very favorable brand image. Even the brand’s current ambassador, Saif Ali Khan conveys sophistication, modernity and refinement.

Taj Mahal should continue to promote itself as not merely a cup of tea, but a superlative experience that demonstrates connoisseurship. Positioning Taj should continue to position itself as a brand that stands out from the competition due to its offering of focus on “taste and quality”. Every cup of Taj Mahal gives the consumer a perfect sensorial experience. Taj Mahal positions itself as being special because-“It is made from the rarest and the best tea leaves. Brooke Bond experts go through a lot of rigor to ensure that only the best, freshest and juiciest tea leaves from a thousand go into every Taj Mahal pack.

It could probably think at getting an Aamir Khan or a Sachin Tendulkar to exemplify the message of quality and perfection further. It should leverage the advantage of having a brand named after a monument that’s known and loved by Indians world over. It should be promoted as a product that is as elegant and wonderful as Taj. SWOT Analysis Future Strategies for Taj Mahal Tea based on SWOT: Participation in e-auctioning – When e-auctioning was introduced, there were initial apprehensions about the transparency in the dealings.

The current system works on improved software developed by NSE-IT, the information technology wing of National Stock Exchange. Now both producers and buyers are used to the e-auctioning system. Now, over 52% of the tea produced in the country is routed through e-auctions. HUL has to actively participate in such tea auctions to exploit such opportunities and also get at par with other competitors by taking part in the e-auctions which account for more than half the tea produced in the country, in order to increase their market share.

Countering internal threats – There was a deadlock over wage negotiations between trade unions and entrepreneurs. Such stand offs are common and HUL should be wary of such threats. HUL should depend more on the e-auctioning system and areas where there are no conflicts on the suppliers’ side like South India which is also the fifth largest producer and the fourth largest exporter of tea, so that their business runs smoothly. Promotion – There are many varieties and flavours of tea which have many health benefits associated with them. Some common examples are mango, orange, jasmine and pitta tea.

HUL can introduce tea with various flavours and promote them by stressing on the health benefits associated with each so as to attract health conscious customers as well as customers who like to try different flavours. Tea Lounges – To counter the threat from other beverages like Coffee etc. Taj should look at the proposition of opening tea lounges all over the country so as to attract potential customers who like to hangout and also spread awareness about the brand. Wagh Bakri Increasing Brand Awareness in South India – A more proactive approach needs to be taken to improve of sales down south.

Most of the sales of Taj is from the northern part of India and Taj has to definitely cover some lost ground in the south. Concentrating on a more regional promotion theme seems to be the most appropriate course of action. Brand Manager Interview Tejas Kapadia Senior Brand Executive Brand Development – Beverages, South Asia Hindustan Unilever Limited Tejas. Kapadia@unilever. com +91-99870 83522 +91-22-39832512 What is the market share of your brand? Value Market Shares are: Taj Mahal – 3. 8% Lipton – 0. 3% How do you study market trends, consumer attitudes, and economic trends? We track using various internal & external methods.

These include retail audit – from AC Nielsen. This gives us an understanding of how the market is behaving, how we are faring against competition and also where are the opportunities/problems. We also use the IMRB – a household panel which tells us how the consumers are using us. How much of us are they using and how often. This panel is helpful for us to know the penetration of our brand/variants; looking at cross usership and also Share of Requirement of different brands in one house. For the Consumer behaviour we have an internal tracking system and if we need any extra information, we conduct different researches from time to time.

How do you carry out sales forecasting? We have a separate sales forecasting team. However this is done in conjunction with the Brand team, trade marketing team, sales force, and sales forecasting team. How do you compare yourselves to your direct and indirect competitors? We are constantly tracking various trends in the market. This includes both direct & indirect competitors. Like I mentioned before in the second question, we have multiple sources to track these. Are you ahead of your competitors in terms of product innovation and new product launches?

We have recently launched Lipton Ice tea across India, This move gives us an edge in terms of positioning the brand, and developing the market. As Taj we are constantly trying to satisfy the consumers’ needs – being the first brand to launch Tea bags, we are now also offering a large variety of flavours – including Green tea variants that today’s consumers are wanting to consume. What are the strategic plans for the future regarding your brand (new geographic region/new variants etc. )? Keeping our consumers & customers at heart we try to make each one of them say “Wah Taj! ”. Sorry can’t disclose any other information here.

Tea Industry

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