Indian tea industry

INDIAN TEA INDUSTRY

The tea industry in India is about 170 years old. It occupies an important place and plays a very useful part in the national economy. Robert Bruce in 1823 discovered tea plants growing wild in upper Brahmaputra Valley. India is larest producer in the world .Tea plantations in India are mainly located in rural hills and backward areas of North-eastern and Southern States. Major tea growing areas of the country are concentrated in Assam, West Bengal, Tamil Nadu and Kerala. The other areas where tea is grown to a small extent are Karnataka, Tripura, Himachal Pradesh,Uttaranchal, Arunachal Pradesh, Manipur, Sikkim, Nagaland, Meghalaya, Mizoram, Bihar and Orissa.Unlike most other tea producing and exporting countries, India has dual manufacturing base. The consumption is above 60 million kgs per yr. India exports tea to most of the European countries, U.S.A., Japan, West Asia and Asia Pacific region there is hardly any country where Indian tea is not found.

While at the time of Independence only 79 M.Kgs or about 31% of total production of 255 M.Kgs of tea was retained for internal consumption, in 2006 as much as 771 M.Kgs or about 81% of total production of 956 M.Kgs of tea went for domestic consumption. Such a massive increase in domestic consumption has been due to increase in population, greater urbanisation, increase in income and standard of living etc. Indian tea export has been an important foreign exchange earner for the country.

The major competitive countries in tea in the world are Sri Lanka, Kenya, China and Indonesia. China is the major producer of green tea while Sri Lanka and Indonesia are producing mainly orthodox varieties of tea. Kenya is basically a CTC tea producing country. Tea is an essential item of domestic consumption and is the major beverage in India. Tea is also considered as the cheapest beverage amongst the beverages available in India. Tea Industry provides gainful direct employment to more than a million workers mainly drawn from the backward and socially weaker section of the society. It is also a substantial foreign exchange earner and provides sizeable amount of revenue to the State and Central Exchequer. The total turnover of the Indian tea industry is in the vicinity of Rs.8000 Crs. Presently, Indian tea industry is having (as on 31.12.2006 )

  • 1655 registered Tea Manufacturers,
  • 2008 registered Tea Exporters,
  • 5148 number of registered tea buyers

Question: Which segments are being targeted and strategies used to influence the target segment?

Tea is the most useful product of nature and it posses lots of importance and medical values. Revolution Tea is considered as one of the magnificent world of tea. Tea also possesses various medical values also as it can be utilized for the purposes for manufacturing medicines. Green tea at revolution is processed and then tested before they are released to be sold in the market. All the procedures are done with high efficiency and it is passed through the great tasting teas, high quality, crafted to go well with the taste of palate of the present day.

The brand I have selected is Taj Mahal Tea. I feel that in today's scenario almost every person from the age of 20 years to 55 years are the target segment for tea. People have more busy lives , hectic schedule they feel relaxed having a cup of tea. The target segment will include students, working professionals, housewifes, labour, etc. These days people are more health conscious and would love to look smart and thin , they have shifted from normal tea to herbal tea, sliming tea, green tea etc.

Regarding the strategies to be used we know that there is lot of competition in the market , there are so many products which are lunched in the market some fail while some flourish. Therefore as a marketer they have to take some steps to motivate there customers to purchase from them. The new competition in the tea marketplace has executives rushing to create corporate alliances never before seen in the tea trade. This trend in tea business re-organization goes far beyond the old, simple concept of mergers and acquisitions. The Company have for centuries been buying one another or merging. Now, you have co-branding, partnerships, joint ventures, and cross-overs.

TajMahal tea is the market leader in the 15,000,000 Kg Indian Premium leaf tea market. This 40 year old brand is constantly evolving to the changing times. The brand which is estimated to be worth Rs 200 crore, so far had a consistent promotional strategy which placed itself in the top league. 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 the brand owners. The brand has already undergone 4 makeovers.

This July saw the relaunch of Taj with a new baseline and world class packaging. The new makeover comes after a change in the communication strategy in 2002-03 . Tajmahal tea was positioned by HLL as the best tea. This " hazaron me ek" tea was promoted using the baseline " Wah Taj " and endorsed by the tabla maestro Ustad Zakeer Hussain.

The brand was consistent in using the same promotional strategy and the baseline. But in 2003 the much popular baseline was changed to " Sabse Khas Taj Ehsas" from the famous and simple " Wah Taj". 2006 saw the brand going back to the same famous positioning " Wah Wah Taj" with an additional "Wah".

The brand still uses the same brand ambassador and is concentrating more on North India (I suppose because it is long time since I saw an ad of Taj while the Tata Tea brand ' Kannan Devan" is having higher "share of voice " in South India esp. Kerala.

Promotion can help the marketer to motivate customers to buy. Big brands can collaborate with each other and can enhance the sales , this can be seen from the given example big companies are promoting each other, Tata Tea has tied up with Kingfisher Airlines and Pepsi Foods to launch consumer promotions to promote its Tetley brand. As for Godrej Tea's core strategy, the company plans to focus on promoting its low unit packs priced at Rs 5 and Rs 10 in rural belts, according to A Mahendran, director, Godrej Tea.

Ques: Different promotional tools used and the strategy behind using these tools?

Promotion involves disseminating information about a product, product line, brand, or company. It is one of the four key aspects of the marketing mix. (The other three elements are product marketing, pricing, place.) In the case of my product tea the product knowledge , experience, age and money affect the ability to make the purchase of the product.

Different promotional tools used and the strategy behind using these tools are:

  1. Discount offers: Give a competitive advantage and To attract the customers
  2. Buy one get one free : To increase the sale of the product and to increase the profits of the company.
  3. The herbal tea is good for health and people who are fitness freaks.
  4. We can keep low price to attract customers.
  5. Personal Selling : Personal selling refers to oral communication with potential buyers of a product with the intention of making a sale. The personal selling may focus initially on developing a relationship with the potential buyer, but will always ultimately end with an attempt to "close the sale".
  6. Sampling: we give free samples to customers . Free distribution of product sales is one of the classic sale promotion methods that is fully defined in non-counted articles and books about marketing .Usually sampling promotion is spent near sale place of the good.
  7. Tryvertising : Another way to increase sales is to give a good for a trial(test). But at this case you must understand the difference between sampling. For example, giving for a 30days trial, is good example of Tryvertising.
  8. Discounts: Discounts are often used by companies and it seems it is the most effective method for sales promotion. Numerous sells off and price markdowns are able significantly increase sales of a company. The main point is to organase it professionally and not to overdo it. In the long run discounts can't last forever and be using with all range of products.It's important to build strategy.
  9. Competitions and lotteries : Last years making Competitions and lotteries is very popular .Such companies as Pepsi and Coca-Cola even spent competitions on TV. At this case competitions was targeted to sales promotion. Do you remember a time when you could find a code under the bottle cap that can win some prize?
  10. Campaign : Usually main point of this method is like: "Buy 2 bottles of Coke and you will get 1 for free!!!". It seems primitive, but at real it gives good results.
  11. A gift in addition : Receive a gift after a purchase of a product. why not? Gifts can be used in few targets: assist on impulsive purchasing and make agiotage, make people interested about it.
  12. Advertise in newspaper: This method usually is used in composition with Discounts or/and Competitions and lotteries. Such newspaper will contain information about discounts on some products or about even on Competitions and lotteries. Very often such newspapers can be seen in supermarkets where you can find a lot of photos of a product with bright letters about "extreme discounts" or "crazy discount.
  13. Shop assistant motivation: It is the last in our list, but not the last in sale promotion. This method have different ways for using, but the most effective on my case is on shop assistant's salary. On my mind he must get fixed salary+ % from sale. At this case seller understand why he must do his best in order to sell more and in final get more money for his work.

Ques: Which strategy out of Pull or Push is used and why?

Marketing theory distinguishes between two main kinds of promotional strategy - "push" and "pull".

Push

A "push" promotional strategy makes use of a company's sales force and trade promotion activities to create consumer demand for a product. The producer promotes the product to wholesalers, the wholesalers promote it to retailers, and the retailers promote it to consumers.

A good example of "push" selling is mobile phones, where the major handset manufacturers such as Nokia promote their products via retailers such as Carphone Warehouse. Personal selling and trade promotions are often the most effective promotional tools for companies such as Nokia - for example offering subsidies on the handsets to encourage retailers to sell higher volumes.

A "push" strategy tries to sell directly to the consumer, bypassing other distribution channels (e.g. selling insurance or holidays directly). With this type of strategy, consumer promotions and advertising are the most likely promotional tools.

Pull

A "pull" selling strategy is one that requires high spending on advertising and consumer promotion to build up consumer demand for a product.

The definition for push marketing has not changed too much since the term was coined: basically, the person doing the marketing is in control of the message being sent out and how it is received by potential customers.

Think of the "push" part as pushing your message into the consciousness of an individual.

Pull marketing, on the other hand, means that the recipient of the message is in control

Push strategy

Another meaning of the push strategy in marketing can be found in the communication between seller and buyer. In dependence of the used medium, the communication can be either interactive or non-interactive. For example, if the seller makes his promotion by television or radio, it's not possible for the buyer to interact with.

The product TAJ MAHAL tea is also example of pull strategy. There are so many offers so many brands in the market fighting to be number one. Some brands gain popularity while some just vanish, tea brands which are quite famous are Brooke Bond, Lipton ,Tata tea .

Ques: Critically Appraise the Promotional strategy of your selected brand.

The brand I have selected in Taj Mahal Tea to critically appraise the promotional strategy I have compared with other two brands Lipton and Brooke Bond.

Lipton has done many promotional strategies like giving out free caps, cups, discounts and gifts on festivals. They have made Personal Selling Strategy many times their sale representatives are selling the product in different bazaars and hotels etc in order to analyse market situations and people behaviour regarding their products.

They can have a schemes like lucky draw that will increase sales and retention of the customers. They should go institutes and give them samples. They can offer discount that purchase bulk quality like hotels.

Taking the next example of Brooke Bond , in the initial six months the price will be slightly higher than the other products to increase the prestige of the brand but after that within few days schemes will be introduced like 10 percent off, or 10 percent free which will enhance the affordability and does not instigate the price decrease which may result in the change of perception in the minds of consumer. This can only happen either in form of loss of quality or loss of sales of product.

Some of the schemes that can be included in the plan are:

  1. Give samples in the form of sachet's or packs and distribute to the retail stores and let them distribute these to customers who are buying items more than Rs. 200 and introduce the new product in the market like that.
  2. Though we can see the promotional strategies used by Taj Mahal or any other brands are there. But i can say they can do mare publicity of their product by putting hording or printing advertisement on the back of the public transportation. They can take help of other celebrities and can do more promotional campaign but i feel people remember Taj Mahal tea with the famous table player Ustad Zakeer Hussain only and the Taj mahal tea was positioned by HLL as the best tea. This " hazaron me ek" tea was promoted using the baseline " Wah Taj " .

    The brand has been consistent in using the same promotional strategy and the baseline. But in 2003 the much popular baseline was changed to " Sabse Khas Taj Ehsas" from the famous and simple " Wah Taj". 2006 saw the brand going back to the same famous positioning " Wah Wah Taj" with an additional "Wah".

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