Report On Tapal By Ali

MARKETING RESEARCH TERM REPORT ON

SUBMITTED BY: SHOUKAT NAWAZ KHAN SUBMITTED TO: ________________________

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TABLE OF CONTENTS ACKNOWLEDGEMENT...................................................................................................3 MISSION STATEMENT....................................................................................................4 VISION STATEMENT.......................................................................................................4 OBJECTIVES......................................................................................................................4 INTRODUCTION...............................................................................................................5 BUSINESS SCOPE.............................................................................................................6 EXTERNAL ANALYSIS...................................................................................................7 PRODUCT POSITION IN THEIR LIFE CYCLE..............................................................8 PRODUCT LIFE CYCLE STAGES...................................................................................9 COMPETITOR’S ANALYSIS...........................................................................................9 SWOT ANALYSIS...........................................................................................................10 BUSINESS PORTFOLIO.................................................................................................12 MARKET SEGMENTATION .........................................................................................14 Occupation.....................................................................................................................14 Tapal Danedar....................................................................................................................14 25-65..........................................................................................................................14 House wives...............................................................................................................14 Housewives...............................................................................................................14 Households/offices.....................................................................................................14 MARKET POSITIONING................................................................................................14 Tapal Danedar....................................................................................................................14 Distributors: ..................................................................................................................16 DISTRIBUTION STRUCTURE.......................................................................................16 Supply Chain...........................................................................................................18 EXECUTIVE SUMMARY...............................................................................................22 Need: .............................................................................................................................24 MACRO ENVIRONMENT..............................................................................................25 MARKETING STRATEGY AND OBJECTIVES........................................27 DEMAND FORECASTING.............................................................................................28 Market Size........................................................................................................................28 Lahore................................................................................................................................29 These are the expected forecasts for the first year as TAPAL aims to break even first year. Then from 2nd year TAPAL would aim to increase its sales for BUBBLE TEA. Therefore, our overall forecasted potential market size for BUBBLE TEA is 4271250.. 29 SWOT Analysis………………………………………………………………………....36 4P’s………………………………………………………………………………………40 Competitors’s Analysis………………………………………………...……………...…42 Porter’s Analysis…………………………………………………………..……………..43

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ACKNOWLEDGEMENT

We would like to thank Mr. Umairzia for giving us the opportunity of working on this report on Tapal. This report has enabled us to apply all that we studied in class and gave us the chance to enhance our knowledge. We are also thankful to Mr.Rehman Afzal, (Brand Manager, Danedar, Tapal Tea Pvt Ltd, Pakistan) and Ms.Hafsa Farooq, (Assistant Brand Manager, Ice tea, Tapal Tea Pvt. Ltd, Pakistan) who provided us with priceless information required for the making of this report.

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MISSION STATEMENT To provide a value added service to our customers with quality, reliable, and world-class service. Customer satisfaction is our number one priority.

VISION STATEMENT •

• •

To provide value and quality to our consumers, our aim is constantly to provide world class service for our customers, deliver value for our products and make Tapal a great place to work for our employees. We aim to have a reputation for innovative thinking in the areas that matter to our customers To become a global brand. To be an innovative, marketing and research oriented company.

OBJECTIVES • • •

To transform our competencies into the best advantage for our clients. To offer quality services with integrity, expertise and professionalism to enhances our client's operation. To offer personalized services according to the clients need.

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INTRODUCTION Tea is one of the most popular drinks in the entire world and the most widely consumed beverage in South Asia. The demand for tea in Pakistan is very high. With such a high consumer base, the competition is also very intense. Brands such as Tapal, Lipton, Brooke Bond and Supreme, being the leading tea makers not only compete with one another but also face intense competition from loose tea. Tapal is a well known name in Pakistan. In 1947, it started business as a Tea leader and so celebrated its 55th anniversary in 2002. Their first shop was in Jodia Bazaar. The journey of Tapal's remarkable success is the combined efforts of three dynamic generations of the Tapal Family. Tapal started out as a family concern under the personal supervision of its founder, Adam Ali Tapal. The company continued to grow under the management of the founder's son, Faizullah A. Tapal. . Currently it is managed by the founder’s grandson, Aftab F. Tapal who has continued giving further strength to the foundations of quality laid by his family. Making a modest beginning over half a century back, today Tapal has become the largest, 100% Pakistani owned Tea Company in the country. It has modern tea blending and packaging factories, warehouses equipped with state-of-the-art equipment and a team of highly dynamic professionals headed by Aftab Tapal himself. He was the first to introduce soft packs in the country. He developed an entirely new brand and categoryTapal’s Family Mixture (the mixture of tea & dust). Mr. Aftab Tapal was the first to invent the highly successful brand Danedar Leaf Blend. In December 1997, Tapal Tea became the first Pakistani Tea Company to earn the ISO-9001 certification: a symbol of the highest international quality standards. Again in December 2000, Tapal acquired the ISO-9001: 2000 certification, making it one of the first few companies in the world to achieve this milestone. In addition to the standard requirements, the ISO-9001: 2000 certification system includes requirements for environment improvement, concepts of

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TQM (continuous improvement) with major emphasis on consumer requirements and satisfaction. Tapal’s success has left many astounded. No magic formula however, lies behind its growth other than hard work, dedication and of course unique blends and better quality.

B USINESS S COPE The Business We are in? We are in the market of Hot Beverages and specialize in the area of Black Tea. We desire a high level of customer satisfaction and unflinching brand loyalty through commitment to quality and constant innovation.

Who are our Customers? We have a diversified customer base ranging from urban to rural areas including various institutions. Hence, Tapal’s target market mainly consists of young adults and adults belonging to high, middle and lower income groups.

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EXTERNAL ANALYSIS A unique combination of high- grown Kenya tea leaves and dust, that gives a refreshing aroma of leaf and strong taste of dust all together in one cup. Tapal is a family name and calls attention to tea as an integral part of our lives whether it is day or night or any time as a source of refresh ness and rejoice ness. Following are the products of Tapal:

Chenek Kenya Dust

Mezban Super

Dust

Tapal Special Teabags

Family Mixture

Jasmine Green Tea

Gulahar Green Tea

Danedar Leaf Blend

Safari Kenya Leaf

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Special Round Teabags

Tezdum

Tapal ice tea

PRODUCT POSITION IN THEIR LIFE CYCLE

BLACK TEA

ICE TEA

Introduction

GREEN TEA

Growth

Maturity

Decline

Implications The industry is in the maturity stage, so competing firms in order to gain market share, constantly innovate and frequently use price-cutting. They also increase communication channels like advertising and sales promotion to entice brand switch. Green tea has is in the growth stage and we believe that there is a potential for growth given that green tea provides health advantage. Thus this property will attract health conscious people. Ice tea is in its introductory stage, it was recently test marketed in Karachi which resulted in a

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successful response in future it will be coming up with new flavors and has a potential to gain a large market share as soon it is launched nationally

PRODUCT LIFE CYCLE STAGES Tea Dust Leaf Mixture Green Tea Ice Tea

Introductory

Growth X

Maturity

Decline

X X X X

COMPETITOR’S ANALYSIS The tea industry is divided into two segments. They are:  Branded Tea  Unbranded Tea Tapal is facing a tough competition from both the segments as the unbranded tea has almost half the share of the total tea industry. The current tea imports are 140,000 tons. The major competitor for Tapal is Lipton especially as the sales competition from this brand in the tea industry is getting cut throat. Tapal is a clear market follower in all over Pakistan as it caters to all the areas rural and urban alike. Lipton Yellow Label is definitely a market leader claiming that it is a premium top of the line product with “a sign of good taste”. But Tapal is the market follower in branded tea. However Tapal has countered this competition strategically by creating positioning and brand pull in customers mind so that they have a separate identity of their own. Catchy slogans like “JAISE CHAHO JEEO” for Tapal Danedar, focusing on the free and

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radiant spirits of the youth which has also been tagged along with “ZINDAGI MAIN BHARO NAYA RANG”. “MUKAMAL GHAR MUKAMAL CHAI” is the slogan for Family Mixture, which positions on the completeness and togetherness of the family and position Tapal as an integral part of the Family.

SWOT ANALYSIS Strengths o o o

 Continuous innovation for increased customer value, for example: First to introduce soft pack in the country, The pioneers of introducing Jasmine Green Tea in Pakistan. The only company to introduce round-tea bags in Pakistan. o The only company to develop an entirely new blend and category (the mixture of leaf & dust).  Tapal is one company that is catering to the needs of all segments of the society.  Export  Tea cultivation  Strong R&D team  Brand sponsored shows such as musical concerts and cricket tournaments.  Good brand awareness in the local target market.

Weaknesses  It is a major hurdle for Tapal to position its tea abroad in the minds of the consumers and encourage them to indulge in brand switching.  Have to import some of their products from other countries, which increase their costs.  Most of the sales are on cash, problem for the distributor then they can switch to competitors.  Tight quality control procedures lead to higher costs and its time consuming and often discontent the suppliers.

Opportunities

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 In the long run there is going to be a lucrative market for Ice-Tea and flavored tea.  The market growth of the tea-bag market because of it being easy to use.  Customers are more attracted towards strong taste and quality of tea offered by tea providers.  There are markets in Punjab, N.W.F.P and Balochistan, which are not as yet explored by competition.  Duty free tea import from Sri Lanka and Bangladesh and India.  Green tea market is growing.

Threats  Strong marketing campaigns of Unilever makes it extremely difficult for Tapal to counter-attack because of low budgets.  Unilever as a more established brand name than Tapal world wide.  High import duties encourage smugglers of tea to grow.  The unstable rules and regulation of the government hinders the tea companies.  Due to climatic conditions, when the weather of Pakistan is mostly hot; consumers would prefer soft drinks over tea.

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BUSINESS PORTFOLIO We will be using the Boston Consulting Group Approach, which is the BCG GrowthShare Matrix to analyze the situation at Tapal. This portfolio takes into account two important dimensions of the market:  The Market Growth Rate  The Market Share The BCG Matrix with regard to Tapal is as follows:

Relative Market Share High

Low

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High

Star Relative Market Growth

Question Mark

o Family Mixture

o Jasmine

o Mezban Premier

Tea /

o Tapal Danedar

Green

Gulbahar Green Tea o Tezdum o Ice Tea

Cash Cow Low

o Chenak Dust

Dog o Safari Chai

o Special Teabags

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MARKET SEGMENTATION TAPAL

Age

25-65

Tapal Danedar

Occupation

House wives

Tapal family mixture

Lifestyle

End Users

Housewives

Households/offices

Female who pride

Households

25-50

House wives

themselves in family

Tapal safari chai

18-30

Athletes

values & cohesiveness. Young, adventurous &

Athletes

Mezban premier dust

13-75

Housewives

energetic individuals Interior Sindhi families

Dhabbas/ Households

who pride in smooth house hold running, family bondage, hospitality, 'mehman nawazee' & quality Tapal special teabags

18-35

Professionals

servings Active, busy & working

Travelers/ workplace

consumers younger in age who seek convenience & in their Jasmine green tea

22+

House wives

busy lifestyles Health conscious,

Households/ Offices

dieting females. Tezdum Chenak Dust

25+ 25+

Farmers/Athletes Housewives/ Blue-

Vigorous/energetic Strong

Dhabbas/ Households Households/ Offices

Ice tea

18-35

collar workers Students

Outgoing, active

Restaurants/cafes

MARKET POSITIONING Brands Tapal Danedar Tapal family mixture

Positioning 'Aur Kiya Chahiye' Fulfilling Unmatched Wholesome 'Mukammal Chai, mukammal Ghar'

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Tapal safari chai Mezban premier dust

Tapal special teabags

Tapal jasmine green tea

Family bonding Traditional Expressive Totality Energetic Adventurous Rishtoon jee shaan, rishtoon jee maan Welcoming Homely Togetherness Hospitality Conveneience Promptness Speediness

Chenak dust

Heatlth consciousness Style Cosistency Fast paced Energezing Refreshing Availability

Ice tea

Strength Chill karo

Tezdum

Refreshing Bubble free

PRICING STRATEGY Tapal follows high-medium price strategy in which it offers high quality tea at reasonable prices. Tapal also follows a Going Rate Pricing strategy, in which it bases its price largely on competitors’ price that is Unilever. Unilever being the market leader always sets the price, and then Tapal accordingly allocates its prices, always lower than that of Unilever. Tea prices have fallen over the years which are because of reduced import duties and costs.Besides taking the competition into account, Tapal does cost plus pricing.

DISTRIBUTION STRATEGY The distribution objective of Tapal is to maximize its market coverage. To accomplish this Tapal has a wide distribution network of 410 distributors across Pakistan. Tapal has a wider distribution coverage in the South where as Unilever has better distribution in the North. Therefore, Tapal’s main objective is to increase their sales in the North. It ensures that it places its tea in the same outlets as its competitors in order to maximize availability. The distribution coverage of Tapal is as follows: 1. Karachi 14%

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2. Lahore 3. Islamabad 4. Sukkur 5. Hyderabad

34% 18% 22% 12%

Distributors: Tapal deals only with distributors on contract basis with no other intermediaries involved. They do not extend credits to their primary customers and all their sales are mainly cash based. The contract comprises of a specification of a complete volume of the market, Tapal’s share in the market, the profit margin of the distributor, the sales that will be made by the distributor, as well as the complete route plan of the distribution network. Tapal chooses their distributors after analyzing their complete financial background and Public Relations. They provide the distributors with a detailed description of the distribution network; all the costs and expenses involved and when the distributor agrees the contract is signed. This contract involves the condition that the distributor has to be brand loyal, pro-active and cannot deal with other tea companies otherwise the contract will be terminated. The contract includes a clause that describes its termination process. Either of the two parties: Tapal and the distributor, can terminate the contract on one month basis.

DISTRIBUTION STRUCTURE

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Company

Distributor

Whole sellers

Universities

Retailers

Restaurants/ Institutions

Offices

House holds

END USERS /APPLICATIONS OF PRODUCTS

Interpretation:

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The manufacturers sell from their warehouses to their major distributors, which sell directly to wholesalers, who either pass it on to the retailers and then to the end user or to the end users directly.  Distributors also sell directly to large retailers and then the product is passed onto the consumers.  This distribution trend of the industry is very similar to what Tapal follows. Tapal also sells directly to OOH (Out of House), which comprise of educational institutions, companies, travel & hot teashops. Tapal’s outlet coverage (2005) was 75% and its market reach(2005) was 30%. 

Supply Chain

Vendor/Supplier

FORECAST

Storage

MANUFACTURIN G

R/D industry

Order Process

WAREHOUSING

Inventory

Type/Market

CUSTOMER /TRADE

DISTRIBUTION

Scheduling/timing

Feedback

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PROMOTIONAL STRATEGIES Communication of the value created by the company is very important; this stage in our view is the trickiest stage of the entire value creation process. The entire effort of creating the value will go down the drain if the communication is not done properly. There are cases when a company fails to communicate the value to the selected target customers or even worse when the target customers get the wrong message. There are many ways to communicate the value created; Tapal has used the following tools and techniques to communicate the value they have created for their target customers.

Advertising; As far as Advertising is concerned, the company has shifted away from television advertising to “MASS ADVERTISING”. The basic reason for the shift is that the organization realizes that television advertising is not the same as it used to be around 12-13 years ago. With a wide range of television channels available it is very difficult to convince the viewer to not to change his/her channel. But this does not means that they do not indulge in television advertising at all. The new brand “Tapal Mezban Dust” is targeted for the customers of interior Sindh. This brand extension needs both TV as well as mass marketing as it is struggling with in the awareness stage. The TV adds show the culture of Sindh and tries to correlate the sindhi heritage of hospitality with the image of the brand. Ads are shown on KTN as it is believed that sindhi viewers do not change the channel during commercial breaks as it is the only sindhi channel. Mass Advertising in the form of billboards are the most common form of advertising. The expenditure ratio of mass adverting to television advertising is 1.5 to 1. Big billboards with high color resolution for ‘Gulbahar’ (their new green tea) are good at tempting the customer to try the crystal clear green tea. The portrayal of men wearing formal suits and having tea at restaurants has persuaded people of the corporate sector to try the slightly expensive green tea. Advertising on the new Fm radio channels like City Radio or FM 107, FM 96 is also extensively done for the young urban crowd for family mixture.

Public Relations; As far as publications such as catalogues and brochures are concerned the company does not have any such publications. They have not yet focused on the possibility of issuing any sort of publications for improving upon public relations.

Personal Selling; The company has a B2B (business to business) approach as far as personal selling is concerned. Sales rep visit hotels like Marriott and Sheraton to offer bulk amounts at a discount rate. Through this process they are able to sell more and this serves as an easy method for further communication of the value which was promised primarily in ads and billboards. Face to face communication of value is much more effective than advertising as immediate feedback can be received which helps in ameliorating the communication process.

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Direct Marketing; Again no form of this communication is taking place at a formal level. The company does not have a separate department. The only form of direct marketing is done by the brand managers who readily receive any complaints and comments about their brand through emails but do not respond to those emails. They only look after certain complaints which have been reported consistently.

Sales Promotion; Sales are promoted by encouraging the market segments through free sampling. The target segments are given free samples of the tea brand which is targeted for them. For instance in Lyari and Malir there are quite a few colleges where people of lower middle class income segment come to study. They like tea which is high in caffeine and strong in taste so that they can nourish their minds. Free sampling of such a brand (Tez Dam) was carried out for almost 2 weeks. After 2 weeks a lot of students bought the product although the product was no more for free and had no market before the free sampling was done.

Sales Force; Tapal at present has hard any notable sales force. When asked why? The company manager responded that since Tapal makes tea. Tea is a convenience product, such products are widely available, and customers have frequent purchase with little shopping effort. Such products have little customer involvement; hence a well equipped sales force is not essentially required. According to the manager of Tapal, making sure that the product is available all the time is more important.

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EXECUTIVE SUMMARY TAPAL intends to launch BUBBLE TEA, which is a fruit flavored instant tea drink intended to be available in strawberry flavor and served chilled. The name BUBBLE should not be confused with the air bubbles that are formed on the top when the tea is shaken. Bubble tea refers to the small pulpy balls made up of cassava (a nutritious starch) also called “tapioca balls”. We have developed the perfect can of the tea, without the bitterness found in other flavored teas. Every BUBBLE TEA we offer contains pure Ceylon tea with milk, creamer, sugar, tapioca balls, herbs and blends of strawberry. Our teas are certified by the Sri Lanka Tea Board to carry only the highest quality Ceylon teas which are under ISO 9002 22

certification, ensuring that every can of BUBBLE TEA is as good as the first. Although our teas at TAPAL are exceptional served hot, but this tea as its name suggest is a brand extension of the cold ICE TEA. Exotic each BUBBLE TEA has been specially blended with the above mentioned ingredients to provide the best can of iced tea you've ever tasted. Our tea drink is currently available in strawberry flavor, which is derived from natural fruit and herbal extracts giving it a highly nutritious image. Our company is founded on the belief that quality is more important than cost. BUBBLE TEA provides the smooth, pleasant taste that the average tea drinker is seeking. Its convenience is highlighted by the metal free large see-through plastic cans served with an extra-wide straw to suck these jumbo pearls. We have conducted an environmental analysis of the industry and the related competitors which affect BUBBLE TEA marketing. TAPAL has followed various steps to reach its target market who are potential buyers of our product. We have decided to take up differentiation as our grand strategy from which the marketing mix variables follow. We aim to make BUBBLE TEA a smashing success as to definitely “REDIFINE CONSUMER TASTE!”

INTRODUCTION The product that we plan to launch is a relatively new product in the tea industry in Pakistan. The product is actually far from the plain-looking tea that you are generally familiar with and it is hard to explain to the uninitiated. It is non-alcoholic and noncarbonated fruit flavored tea with tapioca balls, namely BUBBLE TEA that tastes best when chilled. This product has been launched by TAPAL TEA (Pvt) Ltd. “TAPAL is dedicated to provide customers value for their money”. TAPAL follows segmentation for BUBBLE TEA in which children, teenagers and young adults are the most targeted because cold fruit flavored tea is demanded more by this market.After offering a wide range of brands TAPAL wants to be known for its ultimate market dominance. TAPAL wants to make sure that they give a tough edge to the other 23

competing brands. At TAPAL customers have full confidence when interacting due to the powerful brand and the employees are proud to be part of this successful company. BUBBLE TEA is launched by TAPAL by identifying the following required need and product characteristics:

Need: The need of Bubble Tea is to satisfy the nutritional values, which are currently lacking in the products offered by our competitors. BUBBLE TEA is an instant tea drink, which caters to a variety of taste preferences. Initially it is available in straw berry flavor. The uniqueness of our product is the tapioca pearls or small marbles; they have a consistency like gummy candy (soft and chewy). Being heavier than the drink they tend to always stay near the bottom of the can.

Product: BUBBLE TEA is an instant tea drink, consisting of various nutrients and fruit extracts. The tea is sweet, though it has less sugar than a typical soft drink. The drink is a mix of tea, milk, creamer, sugar and strawberry flavor and the unique tapioca balls. The tea is in pastel color ‘pink’ and giant black tapioca balls. But the fun part of bubble tea isn’t the color or the flavor; it’s the ‘bubbles’. The various product attributes are considered below  Features: Flavor: currently the flavor available is strawberry. Ingredients: derived from natural fruits, including milk creamer, traces of tea and compositions from herbal extracts. . Form: fine instant tea drink in the shape of plastic see-through can. f g

Taste: creamy rich strawberry flavor. Packaging: enhanced, appealing and attractive see-through cans served with extra wide straws

 Benefits: Convenience: BUBBLE TEA is taken in can to enjoy the look and the taste. Convenience can be taken as the plastic can is easy to dispose off without creating any fuss. BUBBLE TEA can be taken as a substitute of tea or fruit drinks and can replace your meal at the same time. h

Nutritional values: Our drink provides extra nutritional contents Like; iron, protein, fiber, vitamin C, Calcium, Sodium and Carbohydrates. 24

.  Levels of product: Core Benefit: Refresher and Stimulant. Basic Product: Tea with tapioca ready to chew Expected product: Can be taken hot/cold Augmented Product: A tea that’s ready to drink and chew at the same time and high in nutritional value Potential Product: Straw berry flavor.

MACRO ENVIRONMENT Demographic Environment: It includes the consumers in terms of size, density, location, age and etc. The population of Pakistan is currently 16 crore out of which 40% is the total market for branded tea. In Pakistan the biggest factor in demographics which effect market planning is age. As the population is very high and most of the population is of children and teenager. So TAPAL has to consider this before launching any new tea beverage. To get the highest share it’s important to understand the need of this group and then make marketing plan.

Competitors:

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As mentioned earlier this is a new product in this industry. This factor has its pros and cons at the same time. Firstly, this market is regarded as the untapped market making it a lucrative venture to start on. However, as there aren’t any previous companies operating in the line of such a unique blend of flavored ice tea with tapioca, we as a company are not fully aware of the reception we will get from the consumers as well as the competitors. We will be having less competition to deal with and that will give us the First Mover Advantage in the local industry.

Legal Factors: In a country like Pakistan the government even after all its efforts has still not been able to control the menace of smuggling because of which products that are not officially accounted, for also act as our competition. There are lots of Government policies that make it difficult to set up an industry in the first place, especially in case of tea industry. The govt. in the past has not been fully supportive because of excessive import of tea leaves on which a lot of foreign exchange was used up. Another aspect of this is that to manufacture fruit flavored tea with tapioca balls we need to import exotic tea leaves from Sri Lanka and tapioca herb from Taiwan in order to maintain the quality of our product and to have edge over our competitors. The high cost of importing proves to be a hindrance in this aspect. The government has also levied GST because of which we might have to increase our prices more than that would be preferred by us in order to meet the govt. regulation and to cover the costs incurred by us.

Natural Environment: Environmental concerns have grown steadily over the past few years. Thus, when it comes to tea beverage in plastic cans the tea cans are the first thing that comes to our minds which can cause pollution. If disposal of these cans is not done properly then government intervention can cost a lot of financial stress as well as bad media coverage. Thus, all cans have a label on it for throwing it in trash rather than on the streets.

Socio-Cultural Factors: In Pakistan, the concept of tea is that of a hot drink that is served with milk, which is taken in the leisure time. On the other hand the product that we intend to introduce is totally on the contrary. Our product is a strawberry flavored instant tea drink more like a shake served in cans with extra wide straws to enjoy the drink while chewing the tapioca balls that’s not only exciting but a part fun. It’s a drink that's fun to eat and that can be taken any time anywhere. Aside from this it also has a lot of nutritional values as compared to the conventional tea. However launching BUBBLE TEA is quite a challenge as the people in Pakistan are not only resistant to change but also have rigid views about the concept of tea itself. TAPAL wants to operate in the society by initiating innovative ways to improve the quality of life nation wide. Therefore the ever-growing

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consumer awareness is going to help us create a niche for our product. However the manufacturing of products creates waste therefore we at TAPAL strive to minimize our negative impact on the environment by supporting sustainable and safe methods of production that reduce environmental degradation. We encourage proper disposal of cans as recycling is done. We strive to show a deep respect for human beings inside and outside our company and for the communities in which they live.

Technological Environment: We at TAPAL are aiming to provide a high quality BUBBLE TEA using the latest technology available. Tea blending and tasting is considered top priority at TAPAL. In order to do this we require a tea manufacturing plant through this modern facility tea is going to be blended and packaged in hygienic conditions untouched by human hands. In order to utilize the latest technology we intend to launch BUBBLE TEA in metal free Plastic cans. This technology will help us in keeping the tea fresh and packaging costs economical. Through the use of these types of soft plastic cans we can cut down on metal content that is being consumed which can produce harmful side effects. The cost of setting up an entirely new plant should be kept in mind because it is going to affect our pricing of the product so that the breakeven can be achieved as soon as possible.

Economic Factors: In Pakistan, the purchasing power of the consumers is increasing. The rich families are becoming richer and the poor families are becoming poorer thus the economy is becoming more saturated. However due to the overall economic developments, the life style of the people is improving and thus purchasing power has enhanced. Tea comes under the beverage category, thus when the income level of the house hold increases its expenditures increase that of luxurious items than food and beverage. Thus the Engel’s law is highlighted here. Keeping in mind the per capita income of the people of Pakistan, we intend to launch BUBBLE TEA, aiming at the high and upper-middle income groups, who are willing to pay a premium price for such an innovative and distinct product. BUBBLE TEA is considered to be a superior product as it is distinct from the conventional tea available in the market by the competitors, in the sense of its form, taste and nutritional attributes.

MARKETING STRATEGY AND OBJECTIVES Marketing Strategy: BUBBLE TEA would be considered product development as it is a new product and targets new market.

BUBBLE TEA 27 Product Development

The target market is younger, energetic and moderate-to-high-income individuals who seek different tastes in their drinks and teas. BUBBLE TEA will be positioned as a drink more fun to eat, for more outgoing people and for people with a distinctive taste. TAPAL aims to catch 60% of market share in the long run. To achieve this TAPAL will maintain high quality of materials and products and keep improving it over the years. Prices could vary slightly depending on competition from other firms. Marketing research expenditure will increase after the initial 2 years to analyze the changes in market.

DEMAND FORECASTING Since we are launching a new product we need to continuously undergo planning. Therefore, we need to calculate an estimate of our market size.

Market Size In order to forecast demand for BUBBLE TEA the potential market size has been calculated. We have done this by determining the population of our main target cities initially where we intend to launch and its respective upper and upper-middle income proportions. TAPAL would aim to sell it to at-least 3 different segments (children, teenagers and young adults). 50% of the sales are going to be targeted towards children, 30% towards teenagers and 20% towards young adults.

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It would aim to achieve the maximum sales growth from the children segment after the first year which would be around 15%. Following a 7-10 %, sales increase in both teenagers and young adults market.

Demand Forecast Karachi: Population: 20 million Literacy rate: 70% Literacy rate of our product: 60% People who can afford our product: 80% People who will eventually buy the product: 50% 20,000,000*0.7*0.6*0.8*0.5 = 3360000 Lahore Population: 12.5 million Literacy rate: 60% Literacy rate of our product: 45% People who can afford our product: 60% People who will eventually buy the product: 45% 12500000*0.6*0.45*0.6*0.45 = 911250 These are the expected forecasts for the first year as TAPAL aims to break even first year. Then from 2nd year TAPAL would aim to increase its sales for BUBBLE TEA. Therefore, our overall forecasted potential market size for BUBBLE TEA is 4271250.

TARGET MARKETING In order to reach the target market we at TAPAL went through a number of steps to identify the potential customers. As TAPAL is launching a relatively new and a unique product this process is very crucial. The target market at the end of the day becomes the most important aspect for TAPAL to target and satisfy the needs and wants in the best possible way yet yielding profits for the company. These steps are: market segmentation, market targeting, and market positioning. The whole market segmentation aspect is covered in the following tables which uses the segmenting variables.

Segmentation Geographic:

Karachi& Lahore

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Density

Urban Can be taken cold as hot conditions are more prevalent throughout the year.

Climate Demographic: Age Income Social class

5 years and above Rs.30, 000/- & above Upper and upper middle class

Psychographics: Life style Personality

Value oriented, sociable & active Compulsive, health conscious & ambitious

Behavioral: Occasion Benefits User status

Regular & special occasion Quality, economy, nutrition, uniqueness and convenience Non user, potential user and first time users

Characteristics Of Target Customers The need identified by TAPAL of the market is a chilled instant fruit drink needed to cool down and to beat the heat of the scorching sun. Thus the product would be used by children, teenagers and young adults. As the temperature in summers shoot up, thus it is necessary to intake these kind of drinks to keep the body temperature cool. As TAPAL is the recognized brand in Tea industry, so Lipton, Brook Bond, Coca-Cola, etc are its main competitors. Consumers perceive the brand as having high quality.

Consumer Profile The following is the general back ground on the type of consumers the target market is going to be made up of and how the average consumer would spend his day normally and the presence of our product in his routine: Consumer Background Family Name: Ahmad Family Size: 4 members (parents and two kids) Income: Rs. 45000/- per month The day of this household starts at a relatively early pace when it comes to Mr. And Mrs. Ahmad. Both bring in their early 40's are aware of the importance of being health conscious. Their day starts at 6:00 when Mr. & Mrs. Ahmad go for their early morning

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walk. Both being highly educated are aware of the benefit this simple morning routine of theirs carries. They return from their walk at about 6:45, after which Mrs. Ahmad serves a chilled can of BUBBLE TEA for her husband and herself. Being high on nutrition, noncarbonated and at the same time low in caffeine content, BUBBLE TEA serves as a perfect substitute for Mr. Ahmad's juice and Mrs. Ahmad's coffee. Through each sip they have something common to cherish and smile about everyday… i.e. spending time together sipping their BUBBLE TEA. At around 7:15, Mrs. Ahmad goes to wake her children up only to find that Faraz, aged 15, due to his never ending assignments had once again had a sleepless night and had just dozed off a while ago. The empty cans of BUBBLE TEA and straws in the garbage bin suggest that he had quite many cans of BUBBLE TEA in the form of iced tea to help him keep his creative juices flowing. His finished piece of portrait on the isle couldn't help but make her proud of perfection her son worked. Realizing that he might be getting late for college, she finally succeedes in waking him up. The next task for her to accomplish was to wake up Sarah,aged 8, for school. If Faraz would have been termed to be suffering from lack of sleep, Sarah could then easily make sleeping beauty make a run for her name. After numerous tries and attempted panic attacks, both the children were up and getting ready to leave. Rushing for their college Faraz and Sarah skips their break fast while grabbing a cool can of BUBBLE TEA that’s not only convenient to handle but easy to dispose and for most provides a complete substitute for their break fast serving them a full nutrition substitute.

Targeting Market segment opportunities were revealed. And hence we at TAPAL decided which market segments to enter. We intend to target a number of market segments through product specialization. We are launching only one version of the product with several attributes (such as nutritional value, taste, and quality) serving the need of both the upper and the upper middle income class groups. Our BUBBLE TEA will not only fulfill the tea requirement but also provide additional features and benefits.

Purchasing Process The decision making process differs due to consumers different taste preferences. Some consumers like hot steaming tea while others prefer staying cool and goes for cold tea beverages. BUBBLE TEA is mainly targeted towards this segment. Moreover, the decision making process varies because of prices. People with more buying power would prefer expensive drinks than those consumers with less buying power. As 50% of the target market is children therefore, their purchase is done by their parents. But, as the rest involves teenagers and young adults thus, they are mostly responsible for their own purchases. Parents have an influence over the children’s purchases but in this matter the season or the climate is also involved. As in summers, the intake is very high but, in winters the purchase level is quite low, according to a research TAPAL has come to a conclusion that even in the rainy season consumer’s still purchase cold drinks and

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beverages. Although the perception of the elders is that it would cause a soar throat but it doesn’t and esp. late teenagers and young adults enjoy more on such weather.

Positioning Different brands of tea are perceived differently by consumers. While Danedar dust is considered to be a pure indulgence brand and associated with strong and different taste more targeted towards adults. Family mixture is targeted at all the age groups and Ice tea is mostly preferred by teenagers while our exotic BUBBLE TEA will attract more to kids and teens. As customers typically chose products that give them the greatest utility, we need to position BUBBLE TEA as a distinct product in the consumers mind. As the tea industry faces fierce competition we need to differentiate our product to gain competitive advantage. In order to achieve this we will position our product through product differentiation. Product Differentiation For BUBBLE TEA’S positioning we have kept in mind to highlight the features, which includes its nutritional values. It consists of additional vitamins, calcium, carbohydrate, fiber and various other nutrients. Apart from this, our product consists of no artificial flavors as it has natural extracts. This reduces the chances of side affects, which are otherwise associated with conventional tea as well as soft drinks. The conventional tea has high level of nicotine, which is very harmful to be taken by all age groups. BUBBLE TEA on the other hand as mentioned earlier consists of natural extracts which cuts down not only the affects of nicotine but the presence of these flavors also makes the use of nicotine redundant. Another feature is the convenience that the plastic cans provide that’s not only easy to handle but easy to store and dispose. We have other features such as the tapioca balls that are easy to chew and the flavor we intend to launch in is strawberry which is highly aromatic and comprise of the finest blends in the world. Metal free plastic cans that are translucent with a wide translucent straw but the main differentiators are these two attributes. Therefore, the main unique selling proposition (USP) for BUBBLE TEA is its nutritional value and the tapioca balls, the drink that’s FUN TO EAT is provided to an average consumer. Positioning strategies The positioning strategies that we are applying to BUBBLE TEA are a combination of attribute and benefit strategies. When we position it on the basis of its attributes, we tend to highlight the features such as nutritional values, flavor, taste, the giant balls and aromatic blends. On the other hand, through benefit positioning the benefits like high quality and convenience. Our positioning strategy is clearly linked to our slogan, which is “BUBBLE TEA…REDEFINES YOUR TASTE”

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The way in which we are redefining the consumer taste is by providing better refreshment and greater stimulation.

BCG MATRIX This is a market growth-market share matrix, and the location of our product is determined by the combination of the two variables. BUBBLE TEA makes up the category of Question marks since it is a new launch therefore has relatively low market share in a high growth market. We do not know as yet how it will be perceived by the market but we hope that it will be able to capture a high market share as the adoption rate of BUBBLE TEA increases.

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MA RR KE T GR O WT H RA TE

QUESTION MARKS

HI GH

BUBBLE TEA CASH COW

DOGS

LO W

R E L A T I V E M A R K E T SH A R E

S W O T ANALYSIS SWOT Analysis is a situational analysis conducted by TAPAL to see its position relative to those of its competitors. The internal analysis is done on two aspects: strengths and weaknesses. The external analysis is done considering the opportunities and threats facing BUBBLE TEA. 35

Strengths  Variety in its own way: This product consists of a variety in its own way consisting of the strawberry flavored drink and the rich tapioca balls that’s the fun part of bubble tea.  Innovative & enhanced packaging: BUBBLE TEA will be packaged in the form of large see- through tempting cans with extra wide straws. TAPAL is committed to providing the best product at the best prices using the latest technology available. We intend to do this through packaging BUBBLE TEA in metal free plastic cans. The use of cans would help us in providing fresh flavor of strawberry so as to enhance the taste.  Provides extra nutritional value to consumers: As compared to our competing products i.e. Cold fruit drinks as well as soft drinks; BUBBLE TEA provides extra nutrients in the form of natural extracts. These extracts provide additional vitamins, calcium, iron, carbohydrates etc. With comparison to the fruit drinks that are out in the market, BUBBLE TEA does not consist of any artificial flavorings or colors. The other fruit drinks like Fiesta, Tang, etc. though claim to be high in the nutritional content, intensively use artificial colors and flavors to enhance the taste and attractiveness of their drinks which can be harmful as compared to the natural extracts that only TAPAL offers.  Convenience: Through the usage of cans and straws we are providing our customers with the convenience of taking any where any time. Although our teas at TAPAL are exceptional when served hot, each BUBBLE TEA can has been especially blended to provide the best cup of Fruit flavored iced tea with exotic tapioca ever made. In this way the consumers can conveniently consume it all year round in any form for any occasion.  USP: The USP is very distinct considering the fact that this product has a combination of attributes that are not otherwise found in the competing products. BUBBLE TEA’s distinctiveness lies in its nutritional value and tapioca which serves as its USP.  Diversity of markets due to varied taste: The feature of Tapioca balls give BUBBLE TEA the advantage to be able to stay afloat in the market due to the fact that the different look of the tea would be able to cater to diverse taste buds, adding more markets to our target market portfolio.

Weaknesses  Strong direct & indirect competition:

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There is strong competition in the industry through the presence of Tea industry giants like Lever Brothers, (Brooke Bond and Lipton) etc. who currently hold 40% of the tea consumption market and in addition Pepsi and Coca-Cola capture a large market share through efficient and widespread promotional campaigns and distribution network.  Conventional perception about tea: In a country like Pakistan the consumption of tea is very high. Keeping this in mind there are a lot of companies catering to this need segment. BUBBLE TEA, though is a differentiated product, has tea as its base, therefore the first image that it conjures up in the mind of users is that of a drink that is taken hot devoid of any fruit flavors. A vast number people in Pakistan are very resistant to change, therefore we will not only have difficulty in creating consumer loyalty but also attracting first-time users.  Reliance on imports: The climate of Pakistan is not supportive of high quality tea plantation. We, therefore, need to import tea leaves from Sri Lanka and tapioca from Taiwan to maintain quality standards. These leaves are considered the best amongst the world. TAPAL, for the manufacturing of the final product rely heavily on these imports and pays 45% import duty which increase our costs.  Aspect of brand loyalty: BUBBLE TEA is entering in a market where the leaders have already been able to make a mark for themselves in due course of time and with the help of massive and series of successful advertising campaigns. The image of these products is deeply embedded in the minds of the consumers and most of them are fiercely loyal to a set of particular brands. BUBBLE TEA therefore has to work hard to come up with an image, which would encourage the people to switch from their brand and induce the element of loyalty for BUBBLE TEA in the consumers.  Devaluation of rupee: The past economic conditions of the country have resulted in deteriorating and unstable value of the Pakistani Rupee in comparison with other foreign currencies. This causes the prices of imports to fluctuate and at the same time reduces the confidence of the importers, on whom we heavily rely upon. Apart from this, these constant fluctuations cause our cost to be generally high time and again resulting in uncertainty.

Opportunities:  High potential in terms of increasing market share:

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TAPAL TEA Pvt. Ltd views the ever increasing market share as an opportunity for BUBBLE TEA. The product that is being offered by us is not readily available in terms of both local brands that are available in the leading stores of these cities. This unavailability leaves a potentially high market share untapped for BUBBLE TEA.

 Higher degree of adaptability from the younger generation: The youth of Pakistan in contrast to their precedents are more adaptable and recipient towards new ideas. It is this adaptability of theirs that will prove to be an opportunity for BUBBLE TEA. Tapal hopes that since our product is not only convenient but innovative and apparently attractive as well, it will attract these youngsters as well as people in their thirties through these features, who over all other things rate convenience and quality first.  Fill loop holes present in the competing products: Appealing, high quality and consistency in taste are features that are over looked by the competitors due to one reason or the other. Even if these features are present in a few products they are highly priced and are not easily available in the market because of being imported. Tapal, with the help of BUBBLE TEA, aims at filling these loop holes by providing variety, uniqueness and consistency in taste all at a reasonable price.  Caters to many tastes: BUBBLE TEA, a fruit flavored tea drink which is part drink, part dessert snack, and all fun caters to many different tastes. For kids just sucking on the translucent straw creates the show, with pearls floating up in succession. Children would like to blow the balls out from the straw to shoot at targets or at each other. Teenagers would also love it (and it's surely more exciting than another diet cola), it's a passable sweet for most diabetics and those of us on yet another weight-loss plan. But the real reason to sample bubble tea is that it's a different, light-hearted, totally unserious way to approach this age-old beverage. And whatever gets more people to think tea has got to be the best reason of all. BUBBLE TEA serves lot more than of its competing products and serves a wider number of users and taste buds.

 Nutritional product: BUBBLE TEA, in contrast to tea and other fruit drinks available in the market, contains no artificial flavors or coloring. Apart from this it’s low caffeine content, non- carbonated and presence of additional vitamins, calcium, carbohydrate and iron contents make it an attractive alternative to the already present drinks in the market. The novelty of our drink will attract the health conscious group of consumers who are other wise neglected. 38

 Economic factors: Economic growth is prospective in terms of living standards and purchasing power, which may help BUBBLE TEA’s growth. Apart from this Tapal faces a growing marketing terms of population.

Threats:  Government policies: Government Policies like GST, which has been levied upon all consumer products, poses as a threat to us as to fulfill this criterion and to cover our costs we have to set our prices higher than we initially hoped for. Apart from this the discouraging policies regarding the import of tealeaves is another threat for us.  Competitor’s strategies and polices: The very fact that BUBBLE TEA is competing against big names like Lever Brothers and Pepsi etc. poses to be a threat for us as these names are associated with high budgeted advertising campaigns and distribution networks. At this initial stage, though BUBBLE TEA will be substantiated with an adequate advertising budget, it may still fall short of that of its competitors.  Downward trends in growth: The inflation at present is a downward trend leading to low purchasing power, which in turns slows down BUBBLE TEA’s sales growth.  Price sensitivities: People are becoming more price sensitive i.e. the demand is becoming more elastic, which is considered as a threat for TAPAL and BUBBLE TEA.  Unaccounted competition: Another threat that BUBBLE TEA faces is competition in terms of smuggled products of the same product category through the Black Market.

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THE 4 P’s FOR THE NEW PRODUCT 1) Product Issues: TAPAL’S BUBBLE TEA is a brand extension. The benefits which consumers would get by consuming BUBBLE TEA are as follows: Energy [ kcal] Energy [kg] Protein [g] Carbohydrates [g] Of which sugars [g] Fat [g] Of which saturates [g] Fiber [g] Sodium [mg] Detailed nutritional plan:

278 1148 2.9 20 18 20 17 0.5 75 100 ml

370 1530 3.9 27 24 27 22 0.6 100 100g

167 689 1.8 12 11 12 9.9 0.3 45 p/portion(45g/60ml)

 Branding: TAPAL is already a well established brand in Pakistan. Therefore, customers would not have any issues regarding the quality of BUBBLE TEA. However, to establish a brand individually for BUBBLE TEA would be difficult initially as it would be a new product. Especial attention would be paid to its design. The tea drink would be in the shape of a can made up of see through soft plastic that’s unbreakable served with extra wide translucent straw to serve the purpose of chewing the tapioca balls sinking at the bottom of each can.  Packaging: The packaging would be done in white and pink color so as to give effect of strawberry and freshness. The purpose of packaging would be to protect the drink and to attract consumers with the presence of the tapioca balls and also to tell about the flavor.  Labeling: The labeling of BUBBLE TEA would consist of Logo of TAPAL along with the name BUBBLE TEA. It would have BUBBLE TEA content (strawberry flavor) along with its date of manufacturing, when it was made. 40

2) Distribution Issues: After the tea drink is manufactured it would be send to distribution centers from where it would be distributed to retailers. This would be followed in all the cities where BUBBLE TEA would be initially launched. Factory

Distribution center

Retailers

Customers

3) Pricing Issues: TAPAL would follow market penetration strategy for its BUBBLE TEA in the beginning. Factors which would be involved in setting price are:  Costs Fixed and variable cost would influence the pricing of BUBBLE TEA.  Elasticity: Our Tea drink is not considered a luxury product and not an essential food item therefore it has elastic demand a rise in price would cause the demand of Instant tea drink to decrease and a decrease in price would probably lead consumers to buy more.

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 Competition: Our BUBBLE TEA prices may not be affected by competition as BUBBLE TEA is the new innovative product that is uninitiated in Pakistan and a niche that’s un- touched by other competitive companies.

4) Promotion issue: Budget for Advertising:  Promotions through hotels and resturants: Rs. 0.8 million Ads would be placed on different channels to capture larger market and also to inform customers of new trends hitting the tea and cold beverage industry. Making consumers aware of the Tapioca balls (new ingredient imported from Taiwan).  Local Newspaper expenditure: Rs.0.2 million For newspaper ads would be placed on Sundays and Saturdays rather than the whole week as it will reach more customers and highest target market (Teenagers and children)  Billboards, colleges and school activities together account for approx 0.5 million in the advertising budget.

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COMPETITOR’S ANALYSIS For BUBBLE TEA, the direct competitors belong to the tea and the indirect competitors are of the beverage industry. These competitors are market leaders or at least definitely strong challengers on their own and have a strong image in the minds of the consumers. The market leaders have opted for mass marketing, aiming to attain maximum market share, hence in hope of maximizing their profits. Where as we at TAPAL, are about to launch a relatively new product, therefore we have chosen to take out BUBBLE TEA in Karachi and Lahore in the form of selective marketing. The consumers we hope to attract belong to the upper and the upper-middle class. The competitors in the tea and beverage industry have the first mover advantage and also cause of this they have had enough time to establish a proper brand name for themselves. Because they have not lonely have had a higher market share, but these companies are also backed by large corporate names such as Lever Brothers backs LIPTON and BROOKE BOND, and other big corporate names like PEPSI and COCA COLA.

MARKET SHARE OF TEA INDUSTRY 10%

10% TAPAL

46% 11%

LIPTON LOOSE BROOKE BOND BUBBLE TEA

23%

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MARKET SHARE OF SOFT DRINK INDUSTRY 10%

4% PEPSI

12%

COCACOLA 7UP

55%

TEEM BUBBLE TEA

19%

BUBBLE TEA aims to be a market challenger; this is so because even though the market leaders have covered a substantial market share yet there still lies room for variety in terms of uniqueness and newer aspects to the already existing products. It is in human nature to always look for newer and better ways to satisfy their wants in the best possible manner. TAPAL, keeping this simple fact in mind identified the need for convenience, variety and nutrition in everyday necessity items in order to over come their mundane lifestyles. BUBBLE TEA keeping inline with its Challenger position will attack its competitors through Flank Attack strategy. By this method we would cover the spots that are overlooked by BUBBLE TEA’s competitors. Our competitors from the Beverage and Soft Drink industry since long have been serving the consumers in the conventional way. BUBBLE TEA, viewing this opportunity will attack these market leaders by aiming their weaknesses that is the lack of nutrition and lack of variety and fun .

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PORTER’S ANALYSIS Michael Porter proposed a model that provides conditions that have to be met for a firm to be nationally competitive and successful. This model focuses on five primary conditions, which he arranged in a diamond-shaped diagram (hence the name "Porter's diamond"). Tapal plans to adopt these key elements for national entrepreneurial success and they are as follows: Threat of intense segment rivalry Thought this industrial sector seems unattractive, since Lipton, Brooke Bond, Pepsi and Coca Cola etc. Are amongst our major competitors, but still the flavored tea with the unique trend of eating your drink…. The presence of the giant tapioca balls, market remains unexploited. We are basically focusing on the middle and low income groups similar to what previously TAPAL has been doing i.e. catering the needs of all classes and since BUBBLE TEA symbolizes fun and energy people consider it to be high quality and are willing to pay the economical price at distinct benefits and features it offers. Tapal being a hot beverage company have to focus a lot of effort on its customer service and its advertising campaign since not many people are aware of the existence of this BUBBLE TEA. Threat of new entrants Flavored tea market is as an attractive industry and people in the past have tried to enter this field, but died soon as they were unable to capture the market and were unable to meet customer’s expectations. The entry barriers for this type of an industry are low where as the exit barriers are high, as a lot of technological advances have been imported for the sake of maintenance of high quality making it difficult for entrepreneurs to make an easy exit. Threat of suppliers’ growing bargaining power Since Tapal plans to have its own distribution network therefore it is able to control the quantity supplied it had its own distributors. Our company plans its distribution network to be spread across three major cities of Pakistan that is, Karachi and Lahore. Threat of substitute products As a number of substitutes available having a high market share and brand loyalty attached to their products make this industry unattractive A company has to also keep in mind the price trend prevailing in the market and in case the technological advances or competitions increases in the substitutes, which may affect the profits and prices of the firm.

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Threat of buyers’ growing bargaining power Since Tapal plans to produce the best quality products with differentiated attributes, making it attractive for the targeted customers. Since we are targeting the product at youth (i.e. teens and kids) bargaining power is relatively low making it easier for us to maintain prices constant and stable.

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