SMP Report on Tapal Tea

Research Report on Strategic Marketing & PlanningTapal Tea Private Limited Plot 40, Sector 15, Korangi Industrial Area, Karachi Submitted To: Sir Ekhlaque Ahmed Submitted By: Imran Ali – 8862 Muhammad Bilal – 8698 Arsalan Yousuf – 8677 Date: 17-04-2010 INSTITUTE OF BUSINESS MANAGEMENT Page 1 TESTIMONIAL We bow towards, The Great Al- Mighty ALLAH for showing us, the strength and courage for all the challenges through out our journey in exploring the wonders of this visionary and dynamic subject of “Strategic Marketing Planning”. Indeed, we are grateful to our mentor Sir Ekhlaque Ahmed, whose dedication, guidance and enthusiasm for the subject always persuaded a challenge for us to become and prove that, how good we are business managers. We had at most optimum, placed our sincere efforts and sheer hard work to satisfy our mentor with this report. We would always like to remember and honor with gratitude toward our family & friends, in supporting and motivating us during days, we felted low and finally, the TAPAL people specially, Mr. Haroon Rashid whose endless support glimpsed a ray of hope and success to this project. Thank You Imran Ali Muhammad Bilal Arsalan Yousuf Table of Contents Executive Summary............................................................................................5 .......................................................................................................................... 6 INSTITUTE OF BUSINESS MANAGEMENT Page 2 Company’s Profile...............................................................................................6 History of Tapal............................................................................................... 6 Business Scope...................................................................................................7 Market Structure of Industry.............................................................................10 Market Share.................................................................................................... 11 Market Structure of the Company.....................................................................12 Market Size - Past four years – Qty (Tons)........................................................13 Market Size - Past four years – Value (in ‘000).................................................14 Market Size - Next four years – Volume (Tons).................................................17 Assumptions for Growth................................................................................18 Dust Tea Segment......................................................................................18 Leaf Tea Segment......................................................................................18 Mixture Tea Segment.................................................................................19 Green tea Segment....................................................................................19 Iced Tea Segment......................................................................................19 Product Life Cycle.............................................................................................19 Competition Growth matrix..............................................................................20 Threat of New Entrant...................................................................................22 Bargaining Power of Buyer............................................................................22 Bargaining Power of Suppliers.......................................................................22 Rivalry between Competitors.........................................................................22 Threats from Substitutes...............................................................................22 Environmental Factors...................................................................................23 Technological.............................................................................................23 Political.......................................................................................................23 Economic....................................................................................................23 Social and Cultural Forces.............................................................................24 Company and Competitor Analysis...................................................................24 Distribution Structure: Shift from 2008 To 2012...............................................26 Distribution Shares And Company’s Positions (2008).......................................27 Top 7 External Trends.......................................................................................28 Input:................................................................................................................ 28 SWOT Analysis..................................................................................................29 Strengths....................................................................................................... 29 Weaknesses...................................................................................................29 Opportunities.................................................................................................29 Threats.......................................................................................................... 29 Cross Matrix Analysis........................................................................................30 Value Chain Model............................................................................................31 Human Resource Management......................................................................31 Technology Development..............................................................................31 Procurement..................................................................................................32 Primary Activities.......................................................................................32 Inbound logistics............................................................................................32 Operations.....................................................................................................32 Outbound Logistics........................................................................................32 Relative Importance of Factors.........................................................................33 Input:................................................................................................................ 34 Rating Against Customer Buying Criteria..........................................................34 INSTITUTE OF BUSINESS MANAGEMENT Page 3 Impact of Issues on Strategic Profile.................................................................36 Customers Buying Criteria: Price...%, Quality Attributes...%............................37 Better................................................................................................................37 Availability........................................................................................................ 37 Taste................................................................................................................. 37 Same................................................................................................................ 37 Color.................................................................................................................37 Quality.............................................................................................................. 37 Worse...............................................................................................................37 Customer Complain Service..............................................................................37 Aroma...............................................................................................................37 10%..................................................................................................................37 20%..................................................................................................................37 30%..................................................................................................................37 Input:................................................................................................................ 38 Improve Aroma and customer complain services.............................................38 The Five Generic Competitive Strategies..........................................................38 Vision & Mission................................................................................................39 Business Objectives and Targets......................................................................40 In Short Term.................................................................................................41 In Long Term.................................................................................................42 Segmentation Variable of the Consumer Market..............................................42 Geographic....................................................................................................42 Climate..........................................................................................................43 Demographics...............................................................................................43 Psychographic...............................................................................................43 Behavioral .....................................................................................................43 Strategic Canvas - Past & Future......................................................................44 Input:................................................................................................................ 46 Selection of Supplier on the basis of price competitiveness can reduce the major part of the production Cost...............................................................................46 Pricing Strategy................................................................................................47 Legging Indicators and Leading Indicators.......................................................47 Action Plan........................................................................................................49 INSTITUTE OF BUSINESS MANAGEMENT Page 4 Executive Summary We the students of the College of Business Management were required to submit a report on "Strategic Marketing & Planning”. There by we have full filled our requirement and have listed our findings in the following pages. We were required to choose a company and analyze all its activities in detail so we chose Tapal. Tapal had always ensured its landmark in quality standards and because of this factor customer value and standards had proved its ultimate goal of customer satisfaction. Today the market share of Tapal have reached the top even in this economic crunch, but on to becoming a leader the company should provoke to raise the bar on a continual basis and to address key success factors, only through mitigating the key issues. In order to achieve the objective of this report we had to rely on our own analytical skills as well the information we received from the major players in the Industry i.e. mainly the three leading Tea manufacturers in the Industry as the likes of Tapal, Unilever, Clover Pakistan and Eastern Tea. We even went further to compile consumer views about different brands and the distributors opinions on the different brands available. To full fill the extensive requirements of this report we broke each and every one of the company’s activities in order to conduct and procure a more in-depth and more meaningful analysis. For each activity analysis tools such as Internal Factor Evaluation Matrix, External Factor Evaluation Matrix, In-Depth Activity Cost Analysis and Competitive Profile Matrix are just some of the tools used in the following pages to bring a consistent and better analyzed answer. We hope the following pages will be better able to answer and give thoughtful INSTITUTE OF BUSINESS MANAGEMENT Page 5 insight into Tapal Tea. Aftab Tapal who gave a whole new meaning to the concept of tea and developed a wide range of tea blends catering specifically to the tastes of people throughout Pakistan. Being one of the few professional tea tasters in the country. Tapal. its competitors and the Industry in which it operates especially in the light of Pakistan’s economy. and has bought the Tapal company to newer and higher levels of success. History of Tapal The saga continued. which were sold from its retail outlet in Karachi’s Jodia Bazaar. and eventually the largest selling brand. Tapal moved up the ladder of success by innovating and introducing different tea brands to suit every taste and pocket. Faizullah A. and a tea connoisseur himself. the quality of Tapal teas became legendary. and soon. and new horizons were explored by the founder’s grandson. his progressive outlook has given further strength to the foundation of quality laid by his family. who initiated tea distribution to retail outlets around the city for the convenience of the people. People from all parts of the city flocked to the outlet to purchase Tapal tea. The saga of Tapal started with his formulation of a unique tea blend. Adam Ali Tapal was the founder of the Tapal Company. which was later named family mixture that led to the Tapal brand becoming a hot favorite. INSTITUTE OF BUSINESS MANAGEMENT Page 6 . Company’s Profile The journey of Tapal's remarkable success is the combined efforts of three generations. The company continued to thrive and grow under the management of the founder’s son. Taking a step forward from this humble foundation. He introduced professional management and unique production ideas to the business. 5 billion rupees every year. INSTITUTE OF BUSINESS MANAGEMENT Page 7 .5%. the demand and the consumption has increased over the years and is growing at an annual rate over 3. Despite the increasing emphasis on its hazardous effects on health and the continuously rising prices. 100% Pakistani owned tea company in the country. Business Scope Pakistan Tea Industry 2009 Pakistan Tea Market Estimated 2009 Branded Tea Segment 53% Loose Tea Segment 47% Urban 33% Rural 67% In Pakistan. Its has set new standards for modern tea blending and packaging factories.Evolving and innovating its way through its near-60 year history. warehouses equipped with state-of-the-art equipment and a team of highly dynamic professionals headed by Aftab Tapal himself. Tea is undoubtedly the national drink and it has more consumption than any other type of drink available in the market today. due to the low literacy rate and unavailability of a better substitute. Tapal is presently the largest. It is estimated that Pakistanis consume over 160 million kg of tea worth over 4. that gives a refreshing aroma of leaf and strong taste of dust all together in one cup. The other manufacturing plant in Raiwind mainly produces two categories i. Tapal has a diversified customer base ranging from urban to rural areas including various institutions. It encompasses the following questions: • Specific Region Regions = where? Tapal Tea. It’s Tea Blending and mixing center is located in Karachi. Tapal Tea further expands its network through Utility Stores. A unique combination of high. Shades of Green. Karachi to which it started his business in 1947 as both whole seller and retailer. Tapal desires a high level of customer satisfaction and unflinching brand loyalty through commitment to quality and constant innovation.As a consequence. What deserves to be mentioned is Tapal’s products are various with premium quality and have passed the ISO9001: 2000 quality system certification. Family Mixture. To meet customer requirements everywhere. has manufacturing capability in the country at its three plants located in which two are in Karachi and one in Raiwind. Business Scope describes “The Business we are / want to be in” through the eyes of the customers. The head office for the operations is based in the cities of Karachi and Lahore with warehouses maintaining the organization’s presence in the cities of Hyderabad. Tezdum and Ice Tea to fulfill its major share contributing south market. middle and lower income groups who are primarily living individual and in family gathering. Mezban. the country’s largest National Tea Company. Tapal’s target market mainly consists of young adults and adults belonging to high. Tezdum and Family Mixture. Chenak.e. People go with Tapal to get the Hence. Multan and Islamabad. The only company owned shop located in Jodia Bazaar. Sukkur. 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 refreshments and revitalize. Army Stores and Modern Trade Network country wide.grown Kenya tea leaves and dust. It defines the areas of operation for the organization. INSTITUTE OF BUSINESS MANAGEMENT Page 8 . The mother factory in Karachi only produces 65% of the total Tea categories like Danedar. Customer seeking needs would be: Primary Attributes: o Strong Taste o Aroma o Color o Premium Quality Secondary Attributes: o o Price Availability • Customers Whose needs? “Rural and Urban” – They are catering to the needs of people living in Rural Areas of Pakistan. Besides. Middle East. • Functions / applications Functions / applications = what needs? Tapal Tea is catering to the basic need of “Tea” accompanied with “Quality and Affordability”. it is also catering to the need of people from urban areas as they also constitute a significant percentage of their total market share. USA.Tapal Tea has divided the country into two main and Six sub regions as. Australia and. as the main market for Tapal Tea happens to be the people from rural areas as its 68% of the total population of Pakistan. other European continents which constitute around 1% – 2% of their total sales. • o o o Added value For Distributors: Competitive Margins Credit Facility For Traders & Wholesalers: High margins INSTITUTE OF BUSINESS MANAGEMENT Page 9 . South Karachi Hyderabad Sukkur North Lahore Multan Islamabad These Regions further classified into Zones/Territories and Towns to extensively cover the market. Tapal Tea is currently exporting to Asian counties of Afghanistan. . and prove existence in international markets. . To be an aggressive player in the market it is trying to exploring international markets where it can not only penetrate.Tactical media strategy for each brand .Restructuring strategies for the bottom of pyramid customer base. . diversify and make long-term investment but also harvest its current business.o o o o o Quantity Discounts Trade promotions and incentives Shop Branding + merchandising Rent Timely Oder Delivery Shelf Space Rent • Considerations Diversify the business in the complementary products. Input: Tapal always seeks out different arenas to beat the competition while struggling to maintain the existing share.Modernizing operations and optimal capacity utilization. . • Boundaries and Future Scope .Customer oriented pricing strategy .Bringing new products (ranges) for new segments and untapped markets . . plan trade driven promotions to strengthen the long term relationships.To broaden exports function in Middle East and other international markets. Market Structure of Industry Category Tapal Mezban Dust Chenak Dust Danedar Tezdum DD-Teabags Family Mixture Jasmine TBs Elaichi TBs Lemon TBs Gulbahar Tapal Ice tea (Can + Powder) Unilever Pearl Dust Red Rose Lipton Yellow Label LYL Teabags Supreme - Clover Pakistan Royal Dust Tetley World Tetley Teabags - Eastern Tea Surhan Dust Dawn Dust Vital Chai Loose /Mushroom Tea Available Dust Leaf Mixture Green Tea Available Vital Chai Available Clear Green TBs Lipton Iced Tea (Powder + Can) - - Available Iced Tea - - - INSTITUTE OF BUSINESS MANAGEMENT Page 10 .Strengthen the brands and communication to avoid internal cannibalization.To maintain the leading position in the local market.Matching production with increasing demands in the future. Market Share P k nB n edT Ma et 2009 a ista ra d ea rk Eastern Tea 9% Others 4% Clover Pakistan 4% Uniliver 40% Tapal 43% Quantitative findings INSTITUTE OF BUSINESS MANAGEMENT Page 11 .Inputs: Tapal is present in all the brand segments of Tea industry but there is a gap in the mixture and Ice Tea segments so Tapal must develop strategic plans to enhance these two categories. Foreign Distributions INSTITUTE OF BUSINESS MANAGEMENT Page 12 . Family Monthly Budget Contractual Restaurants. Purchaser Procurement Dept. Officials Finance Dept. Hotels/Cafes. Administration Dept. Input: Tapal Tea must sustain the market share but explore new markets to avoid internal cannibalizing amongst its existing brand.• • • Over all the branded Tea market has been greatly dominated by Tapal. stealing 43% of the markets share. Offices supplies Portion of Traders/wholesalers Family Shoppers Arm forces and their families Foreigner Consumers Satisfy Tea drinking needs B2B B2C Leaf End Users Product Applicatio n Product Discounted Price Mixture Leaf Dust Iced Tea Govt. It also highlights the fact that Tapal and Unilever market shares represent the major chunk of the consumer base. Market Structure of the Company Masses Bulk buyer Price sensitive Masses Masses Shoppers Price sensitive Convenient buy Contracted supply B2B Discounted Price Economy Packs Mixture Leaf Dust Vendor/contractor Finance Dept. followed by Unilever 40% The other Tea manufacturers only hold 4% of the markets share which reflect that how difficult is it to penetrate the market. B2B B2C Profit margin on bulk buying Mixture Leaf Dust Owner Proprietor Consumer Traders Retailers Whole sellers Restaurants Hotels/Cafes Corporate Offices Banks Influencer Govt. Officials Finance Dept. Procurement Dept. Past four years – Qty (Tons) INSTITUTE OF BUSINESS MANAGEMENT Page 13 . as they custodian of their respective areas defined by the company. the key player in the distribution structure is “the Distributors”. grant would have a substantial impact on its operations. Armed forces is a niche segment but contributing a portion of the cake. These distributors are further cover whole sellers and retailers.Educational Institutions USC/CSD Distributors [General Trade/Wholesale Out Of Home] Modern Trades [MAKRO/METRO] Armed forces & Export Channel The Manufacturer Synopsis: In the Tea Industry. • • • Market Size . • International Modern Trades are the next sales drivers in the FMCG industry but may damage the distributor or attract the company direct distributions USC/CSDs are also playing an important role in the market but its dependency on Govt. These distributors are basically hired by companies. Rate of Exchange due to Export market supports business. *All in Ton Market Size .Past four years – Value (in ‘000) INSTITUTE OF BUSINESS MANAGEMENT Page 14 . 604 72.565 88.825 4.540 13.771 59.489 5.854 3.1% 163.4% 152.564 42.021 11.038 83.7% 50.476 54.767 85.462 2.182 4.833 12.374 5.373 2006-07 52.245 12.936 74.640 70.059 26.317 13.492 76.884 16.395 57.2005-06 Rural Loose Branded Urban Loose Branded Grand Total Loose Total Branded Total 100.283 5.0% 157.900 17.674 147.155 2.155 16.0% 38.332 87.667 36.6% 35.321 26.558 18.4% 46.312 77.912 27.485 80.716 11.541 59.765 28.796 57.328 2006-07 103.456 2.160 *All in Ton 2005-06 Dust Sub Total Rural Urban Sub Total Rural Urban Sub Total Rural Urban 50.636 2008-09 111.186 1.991 16.425 35.300 83.119 2007-08 107.8% 37.5% 52.007 16.956 1.175 62.744 5.123 38.532 Leaf Mixture INSTITUTE OF BUSINESS MANAGEMENT Page 15 .397 61.374 80.654 47.301 4.387 17.776 17.8% 44.851 11.1% 48.159 5.4% 48.381 34.729 3.532 11.051 56.433 2007-08 54.101 3.748 34.477 2008-09 57. Branded Tea segment is showing healthy growth especially in rural markets where as market is gradually saturating in urban area. 2.395 47.640 100.771 48. people are serving Tea as an economic point of view and with draw from the serving of cold soft drinks to their guests as an expensive drink 3. • • • Input: INSTITUTE OF BUSINESS MANAGEMENT Page 16 . Green Tea has developing bit-by-bit as the health awareness level gradually build in the mind of the consumers.936 107. In the Tea Industry. This segment is very niche as the consumption pattern has restricted consumer with the diet planning.397 50.175 52. Dust and Leaf has a major chunk of the Tea industry in terms of Black Tea.Total Black Tea Grand Total Rural Urban 147.317 *All in Ton Total Tea M arket 120.245 152.000 80. • Iced Tea portfolio has yet to be waited for the acceptance from consumers as the brand is premature for the industry and need few more years to be established. health issues and exposure to particular social class.604 103.000 40. Per capita income has been increased which caused in increase of Tea consumption with the growth in the population rate.833 157.000 100. Bottom of Pyramid market In Mixture category which was the legendry brand of the time and initially blended by Tapal when first started its business in Pakistan is now either being matured or cannibalized by other brand. However the dust category is now become 2nd most demanding brand and has been continuously increasing among the core tea users especially in rural areas because of two major concerns as: 1.492 111.000 60.540 163.000 20.000 0 Urban Rural Urban Rural Urban Rural Urban Rural 2005-06 2006-07 2007-08 2008-09 Branded Tea Loose Tea Synopsis: • • The overall Tea industry has been growing gradually both in terms of sales and revenue. Market Size . good pricing strategy related to bottom of pyramid market i.Next four years – Volume (Tons) INSTITUTE OF BUSINESS MANAGEMENT Page 17 .e.Overall the industry has natural growth with respect to the Population growth rate. Rural Market could capture more returns for the company as well as market share. However Green Tea and Ice Tea needs to be milking to sustain their growth. Therefore. Assumptions for Growth Dust Tea Segment Rural population is continues growing in Pakistan and hence the market size is increasing proportionally as the total area expending and regular Tea consumption of the people has also increased. Leaf Tea Segment There is a pilgrim shift in the economy of Pakistan which has stretched the middle class upward as a consequence more and more consumer switch to this premium brand. Since the Dust category is the flagship brand of this market hence the demand has been increasing at the average rate of 3. In Pakistan. INSTITUTE OF BUSINESS MANAGEMENT Page 18 . the growth rate of Leaf is around 2.3% each year.5% this year which is the highest growth in last 5 years. Teabags are the major revenue generators in the Leaf category in the local urban and international markets providing high contribution margins to business. Product Life Cycle INSTITUTE OF BUSINESS MANAGEMENT Page 19 . consumers would prefer soft drinks over tea but due to low awareness level this segment would take couple of years to build the market as the youth has been moving towards the healthy lifestyle and trend lovers in urban areas. where the weather of Pakistan is mostly hot. Iced Tea Segment Due to climatic conditions. Input: Tapal must sustain its current position in the industry but strive to capture the share from the competitors and Loose Tea market by offering good value for money to consumer at every price point. As the literacy rate is continue to increasing in Pakistan therefore more growth is expected in this category. Women are the key part of the overall Tea purchasing and making so targeting this gender and rewarding would be effective for Tapal to grab the market share.Mixture Tea Segment This category is reaching at its maturity stage but in last decades it was a primary brand of the market. Also one of the major reasons of down this brand is low price gaps between the category brands which stimulate the customers to switch on other brands Green tea Segment People have become health conscious today and would want to prefer green tea over the traditional black tea but this category has a niche segment so would take time to build in future. Product Segment DUST Mezban Dust Pearl Dust/Redrose Royal Dust Introductio n Growth Maturity Decline *** +++ ++ + LEAF Danedar +TB Tezdum Supreme LYL + TB Vital Chai Tetley World *** +++ ++ ++ +++ + + MIXTURE Family Mixture Vital Chai Tetley World + TB *** +++ ++ + GREEN TEA Shades of Green Lipton Green Tea *** ++ + ICED TEA Tapal Ice Tea Powder Lipton Iced Tea Nestea *** + + + Competition Growth matrix COMPETITION DUST SEGMENT LEAF MIXTUR E GREEN TEA ICED TEA OVERAL L INSTITUTE OF BUSINESS MANAGEMENT Page 20 . • The change in prices and margins has a direct impact on the sales of the segments • Tea consumers in market greatly rely on strong brand name and reputation created over the years. Green Tea has a huge potential of longevity but more variants to be launched in order to sustain growth More and continuous investment would required to develop the Ice Tea market and opportunity to launch new variants Low cost leadership would improve the pricing strategy • • • • INSTITUTE OF BUSINESS MANAGEMENT Page 21 .000 4.000 Historical Growth Projected Growth Company Profitability 4% 3. • Mixture category must clarify its positioning to sustain in the market. • Iced Tea segment is still premature concept in Pakistan but the trend would be more favorable in future for this category. Leaf and Green Tea Segments Mixture is facing challenges as of being approaching maturity so preemptive action would be taken to avoid lose of positioning and cannibalizing. • Each company has a set target market in which it capitalizes but now they are doing guerilla warfare strategies to capture more share in the market.6% 7.8% 10% 9% 22% 13% 3% 3% 6.5% 1% 1% 3% 4% 4.6% Synopsis: After analyzing the market for its capacity and its segmentation.000 Unilever Tetley World Vital Chai Lipton Iced Tea - 32. Input: • Growth in Dust.4% 6% 3% 2.000 Clover Pakistan Eastern Tea - 3.(in Ton) Mezban Dust Chenak Dust Pearl Dust Red Rose Royal Dust Surhan Dust Dawn Dust Danedar DD TBs Tezdum LYL packs LYL TBs Supreme Tetley World Tetley TBs Vital Chai Family Mixture Jasmine TB Lemon TB Elaichi TB Gulbahar Clear Green (Mint + Lemon) Tapal Tea Tapal Ice Tea 33. we have come up with the following findings: • The Tea Industry is directly influenced by the changes in the economic factors and stability • Each segment has its own stimuli or functionality which affect the product demand especially Dust segment is penetrating in the urban areas of upper Punjab and has a greater influence on the other variants. Threats from Substitutes Coffee is a substitute for tea as both fulfilling the core need of refreshment. Rivalry between Competitors There is an intense rivalry among the competitors. Both are always trying to capture each other’s market share and in the recent retaliation strategies from Tapal have been fruitful. Tapal Tea needs to bring down its price in order to make the consumers shift from Loose Tea or other branded Tea without compromising quality. which can be observed by the entry of two new competitors in the tea market in the last five years i. In the category of coffee Nescafe has a lion’s share and it is an indirect threat of substitute for Tapal because in the winter season people usually prefer coffee over tea. INSTITUTE OF BUSINESS MANAGEMENT Page 22 . Bargaining Power of Buyer In case of Tapal the bargaining power of Buyer is low because the there are so many distributors in Pakistan and Tapal has a wide range of options to choose. However.Porters Five Forces Model Threat of New Entrant Ever rising number of Mushroom Tea products is new entrant in the Pakistani Tea industry and are threat for the other three key players in the market namely: • • • • Tapal Tea Private Limited Unilever Lever Pakistan Limited Eastern Tea Private Limited Tetley Clover Pakistan Limited Pakistan is truly a rare land. Unilever. The main competitors of these companies are Loose Tea (smuggled) markets i. Unilever capitalizes on its strong hold as the Multinational Giant in the FMCG market due to its multiple product lines in the segments and their low prices. Supplier’s bargaining power is high because there are many distributors available but the market has limited number of suppliers. the main competition and rivalry is among Unilever & Tapal. As we have already discussed. Bargaining Power of Suppliers In case of Tapal. Eastern Tea and Clover Pakistan in this very order. which has been successfully operating in the rural markets especially on price packs. as the market has a lot potential. Tapal Tea on the other hand does directly compete with Unilever at the Tea base since it has only Tea manufacturer. Tapal Tea needs to come up with a differentiation strategy to put up a fight with Loose Tea which is projecting a low priced. Mushroom Brands. Tapal. The industry is dominated mainly by four companies. Clover Pakistan & Eastern.e.e. We have discovered that the consumer is not ready and willing to pay price for a cup of Tea that is only affordable. home to different civilizations and diverse cultures. Legal imports declined 12. The success of these hard packs has been such that other tea companies have also followed Tapal's lead and launched some of their brands in hard packaging. The trade is growing. bringing it down from 20 percent to 10 percent to what it said protect the local industry and curb the menace of smuggling. Firstly. Few years back Tapal has improved the technology to hard packaging. Though fluctuations in the demand do occur. and Dubai. Tapal was the pioneer in soft packaging and round tea bag. They imported this innovative technology and established a fully automatic facility under the guidance of their founder. inflation results in rising prices for the raw materials purchased by Tapal. The government loses huge money in import duties and domestic importers face tough competition from those who are instrumental in bringing back tea meant for Afghanistan. Saudi Arabia. in a recession the demand of a product falls since the buyers consume less of the product due to falling incomes. where soft packs were produced for the first time in Pakistan. Right now Tapal is exporting tea to some of the countries abroad like Canada. Also it has to fulfill all the rules and regulations as per law. This decline resulted in more production and Tapal discovered a new market for herself and started exporting its blend tea. inflation affects the consumers’ psychology and they become more selective in their purchases. in FY05. Illegal imports are substantial. Fluctuation in the import duties by federal government is an issue of great concern for all tea-marketing companies. tea imports during 2004-05 increased by over 10 percent compared to 2003-04 mainly due to a cut in the import duty. a 10 percent increase. these are not major fluctuations as demand for tea is inelastic in relation to price. Inflation Inflation plays a major role on the marketing strategies used by a company due to two main reasons.000. Tea smuggling is a matter of great concern. Economic Another major factor that affects Tapal’s marketing strategy is the conditions prevalent in the economy. 48. Adam Tapal. The main economic forces affecting the market are: Stage of Business Life Cycle Whether the economy is in a recession or in a boom. Most is Indian low-grade bulk tea transported through Afghanistan and sold bulk in markets in the towns near the Western border. If we look back in past.000 kgs. In a boom the demand of the product increases. were brought illegally into the country during FY06 and 40. the federal government in the budget 2004-05 cut by 50 percent the import duty on tea. Similarly. Secondly. it affects the activities of Tapal in a way that it influences the demand of their product.000 kgs.5 percent in the same period. untouched by human hands whilst the hard packing technology keeps tea fresh and packaging costs economical. which in turn increases the cost of production. Political The political & legal forces that affect Tapal are the taxes & excise duties levied on Tapal’s products and its imports. This factor plays a major role especially if the increase in cost cannot be transferred to the consumers in the form of raised prices.000. At this facility tea is blended and packed in hygienic conditions. nearly 1/3 of domestic consumption and an 81 million USD business. INSTITUTE OF BUSINESS MANAGEMENT Page 23 .Environmental Factors Technological Technology is also harnessed at Tapal to benefit the consumer. He was the first to introduce soft packs in the country. today Tapal has become the largest. Again in December 2000. Competition in an industry is of four kinds • Product form competition • Product category competition • Generic competition • Budget competition In the case of Tapal we would be considering the following competition that is: Product Form Competition In case of Tapal product form competitions are: • • • • • • Brokebond Supreme Tetley tea Lipton tea Vital Chai Surhan Dust Mushroom Tea Product Category Competition In case of Tapal product category competition would be: • • • • • • Danedar Kenya BP Mix Patti Super PFI Brazil Green Tea Bangladesh Green Tea Lemon Grass INSTITUTE OF BUSINESS MANAGEMENT Page 24 . 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. For instance. making it one of the first few companies in the world to achieve this milestone. Mezban tea was developed as a stronger tea keeping in mind the taste of the consumers of interior Sind Company and Competitor Analysis Making a modest beginning over half a century back. 100% Pakistani owned Tea Company in the country. Tapal’s success has left many astounded. In addition to the standard requirements. He developed an entirely new brand and category. concepts of TQM (continuous improvement) with major emphasis on consumer requirements and satisfaction. Tapal acquired the ISO-9001: 2000 certification. dedication and of course unique blends and better quality. Consumer adoption of a product depends greatly on the target markets beliefs. the ISO-9001: 2000 certification system includes requirements for environment improvement. Mr.Social and Cultural Forces Society and culture plays an important role in determining the marketing plan of Tapal. warehouses equipped with state-of-the-art equipment and a team of highly dynamic professionals headed by Aftab Tapal himself. tastes and values of the people. lies behind its growth other than hard work. Aftab Tapal was the first to invent the highly successful brand Danedar Leaf Blend. No magic formula however. It has modern tea blending and packaging factories.Tapal’s Family Mixture (the mixture of tea & dust). • • • • • BPI (Indonesia) Kenya Mix Tea Kenya Dust F-1 Kenya Green Tea (Indonesia) Generic Competition In case of Tapal the Generic competition comprises of: • • • • • • • Nestle Instant Coffee Nescafe Coffee Mineral Water Cola Cadbury Coffee Lipton Ice Tea Juices and soft drinks Budget Competition Incase of Tapal the Budget Competition is: • • • • • • • • Restaurants Hotels Offices Educational institutions International Modern Trades Cafes Airlines Arm forces USC/CSDs • INSTITUTE OF BUSINESS MANAGEMENT Page 25 . Tapal has been improving the OOH structure to capture the opportunity in the future. INSTITUTE OF BUSINESS MANAGEMENT Page 26 . Introduction of the Modern Trades in Pakistan would influence the distribution and other local government subsidiary chains as of more convenience factors and volume share by offering memberships and freight cutoffs.Distribution Structure: Shift from 2008 To 2012 % DISTRIBUTOR MODERN TRADES USC/CSD OOH Tea Market 2008 65 7 10 18 100 % 2012 50 20 7 23 100% Synopsis: • Distributors will divert themselves towards the large retail stores as the margins are continuously cutting off so the Tapal Tea outlets coverage would be tougher than before. Utility Stores has dependency upon the Government subsidy if the policy changes they could be having great impact on the market. • • • Input: Tapal should reduce the cost of operation and logistics to not only retain its current distributions network but also minimize the margin gaps amongst the sales sources. o Whole sellers are very dynamic in their demand as they try to find the better option and direct reach the Modern Trade channels. Kiryana stores. Tea is also being channeled through various other channels in order to reach to end consumers. o The outlet coverage is almost 85-95% in South but 65% in North.Distribution Shares And Company’s Positions (2008) ALL PAKISTAN DISTRIBUTIO N 60 7 18 5 COMPANY’S TURNOVER SHARE 70 10 15 5 #1 COMPETITOR’S TURNOVER SHARE 60 15 15 10 OUTLET COVERAGE 65 90 75 25 % DISTRIBUTOR (GT/WS) MODERN TRADES USC/CSD OOH The only change in the last 4 years is the introduction of IMT (International Modern Trade) with their regional placement and presence at key transaction centers. INSTITUTE OF BUSINESS MANAGEMENT Page 27 .000 outlets across Pakistan. o Distributors are the institution through which availability of products is possible across the retail trade. However. • Heavy investment in the marketing promotions in OOH sector can build strong and long-term relationships with the corporate businesses and other complementary goods manufacturers. o o o o o o GT= General Trade (general stores. & 30% respectively. The total number Tapal’s exclusive distributors are approx 435 distributors covering 114. Tapal’s exclusive distributors have a very good relationship with them. distributor & direct is 70%. Where. o The company’s turnover share through. subsidized shops CSD=Canteen Stores Department – Cantonment subsidized shops Input: Further expansion in the distributions to increase coverage and reach more consumers and market share. The important thing is that they must integrate into total marketing mix because of time and money required to setup an efficient channel. Medical and General stores) IMT= International Modern Trade (departmental stores/Hyper Market such as Makro) Whole seller. o The distribution structure of Tapal Tea and Unilever is comprised mainly of “distributors”.is route to direct to the rural areas and offered quantity discounts USC=Utility Stores corporation – Govt. INSTITUTE OF BUSINESS MANAGEMENT Page 28 . As a consequence. high profits Influence on sales and marketing Promotions Market share increases More demand of Green Tea as an Health benefit indicator Low ROI.Top 7 External Trends Taking advantage Trend Growth of rural markets of Sind and Punjab. price erosion. market share Cutoff Profit and margin Opportunity. Tea has become a national drink of Pakistan and has more preference over other beverages especially in rural market which is contributing 66% of the total population of the country. compelling brand communication and product innovation. budget constraint . the market size is continuously increasing so far caused more consumption of tea. • • Input: Focus on the cost reduction. managing healthy brands. Tea prices in international market are randomly increasing in a fiscal year which caused cuts n profitability in major brands. Since the SEC classes have been stretching towards the upper middle level therefore the demand of the premium product has increased as well as price products in lower middle. More receivables We Yes No Yes Yes Yes Yes No C1 Yes No Yes Yes Yes Yes No C2 Yes No No Yes Yes No Yes C3 Yes Yes No No Yes Yes Yes Synopsis: • • • Since the industry is on the growth as population expansion in Pakistan especially in rural areas so the arrival of new entrants has major impact on the industry. This industry is still following the conventional rules of communication therefore no company yet entered in this strategy. focus of companies on this area Manufacturing Cost Increase Teabag Growth Digital communication Population growth Healthy Lifestyle and awareness Customer/Trade Credit Policy Potential Impact Increasing competition. Complementary goods are going more and more expensive then before i. Limited budget and investment in the business Weak coverage in upper northern areas of Pakistan high Price gaps between product line Single product manufacturing company i. efficient ROI 6. Competitors launching newer brands with high margins at reduced price for our price-sensitive economy proving serious threat in near future 4. on Tea Import 2. No customer complain center within the company. Economical pricing strategy Short term credit policy i. INSTITUTE OF BUSINESS MANAGEMENT Page 29 . 2. Increase counterfeit and IP issues 5. Company name image –1st National Tea Company Highly experience Sales staff + exclusive sole distribution network Efficient production capacity Expertise – Tea Blending. Sugar etc. Central and upper Punjab has tremendous potential for growth and profitability 5. 4. Competition is still weak in south coastal areas 6. 5. just Tea No specified R&D department Opportunities 1. Abolishment of Subsidy given by Govt. 4. Weaknesses 1. Green Tea market is growing because of health awareness programs Threats 1. Milk. 5.e. Tea prices are become high in gray/loose tea market 7. Initiatives in price pack category as to capture value from price sensitive customers 3.e.e. Growing rural market and export 2. Newer segments introduced with entry of new brands which still have huge potential for growth 4. Attraction for new entrants in the industry 6. 2. 6.SWOT Analysis Strengths 1. 3. WTO (World trade Order) opening local markets for global competition. 3. 3. Company name image –1 National Tea Company with recognized brands 2.4 & 5 Ability to resist Weaknesses 1. 4 & 5: S2.e. Abolishment of Subsidy given by Govt. 5. Weak coverage in upper northern areas of Pakistan 4. efficient ROI st T1. Milk. WTO (World trade Order) opening local markets for global competition. Competition is still weak in south coastal areas 6. Expertise – Tea Blending. Green Tea market is growing because of health awareness level O1. on Tea Import 2. Increase counterfeit and IP issues 5. 4 &5 High Potential O6:S1&5 Increase Market Share O7:S4 Segment Growth Threats 1. Tea prices are become high in gray/loose tea market 7. Sugar etc. 3. 3.5 & 6 Ability to resist T2. Limited budget and investment in the business 3. Economical pricing strategy 6. Newer segments introduced with entry of new brands which still have huge potential for growth 4. High Price gaps O4:W3 T6:W5 High Risk T5:W3 Market Saturation T3:W2 Price wars Hire new distributors O2:W4 More customer switching INSTITUTE OF BUSINESS MANAGEMENT Page 30 . Short term credit policy i. Strengths 1. Efficient production capacity 4. 2. No customer complain center within the company.3. Central and upper Punjab has tremendous potential for growth and profitability 5.2. Competitors launching newer brands with high margins at reduced price for our price-sensitive economy proving serious threat in near future 4.e. Complementary goods are going more and more expensive then before i. Highly experience Sales staff + exclusive sole distribution network 3.3 & 5: S1. Growing rural market and export 2. Initiatives in price pack category as to capture value from price sensitive customers 3.2:S1. Attraction for new entrants in the industry 6.Cross Matrix Analysis Opportunities 1. The software we really impressed with is the Oracle software used in the sales department to dispatch orders to distributors. territory. In this oracle software they have record of every distributor and its zone. This INSTITUTE OF BUSINESS MANAGEMENT Page 31 . Single product manufacturing company i. values that were based on good business sense such as establishing a tea-shop in the business area of Jodia Bazaar.e. If the stock is not available an alert message will prompt on the screen and then the sales executive on his own discretion allocate the items to distributors. To record the attendance of employee and to enforce the punctuality there’s a machine on the entrance of the factory where every employee has to put his/her finger and enter ID card number and their arrival time will be recorded. Value Chain Model Human Resource Management Tapal's management philosophy is based on the traditional values of the Tapal family. In the new order-booking format there is a table. which is divided in to following columns: In this process they call the number of stock requested by distributors in the column of quantity reserved. Although Tapal can automate this process too but in this case workers working their might loose their jobs. Tapal has Hesser & Sohrab machines require less human requirement and whole work is automated only the finished product are packed in cartons by the workers. This mix of tradition and innovation has become the hallmark of the winning Tapal strategy. We search the customer name and then book new order. just Tea 6. No specified R&D department.between product line 5. Some of the key features of the management philosophy are: • • • • • • Accessibility-Open Door Policy On-Going Training & Development Discipline & Respect at every level Participative Management Style Performance Appraisal System Excellent Employee Compensation Technology Development Tapal is always striving to install the most innovative technology in their firm. If an employee wants a leave on so and so date he/she must access the server and send an email to the HR executive and the confirmation will be delivered to the employee. Human Resource department has software through which they maintain the leaves encashment record along with full information about every employee is maintained. town. The company is managed by a dedicated team of highly qualified and experienced professionals with diverse experience. In the production. aroma and many other aspects. INSTITUTE OF BUSINESS MANAGEMENT Page 32 . in Srilanka it takes place in Colombo. The Tea and Blend department initiates the whole process. Incase of a rejected sample a replacement is made of another kind of tea. This software keeps record of all purchases. If the sample is approved by the tea tester then the purchase is made. In a private offer the tea gardens send samples to different tea industries. On a auction and on a private offer basis. samples.e. All teas are brewed in the same manner with the same amount of contents for the best result. Operations The testing procedure is as such that the samples are displayed first. Outbound Logistics The outbound logistics in the south region is provided by the Al Mohammadi Enterprises. country and the person selling tea. In front of the samples is a cup which has that specific tea in it. Thus to keep a record of all such purchases and samples Tapal has prepared a software called the Raw Tea Inventory. be in touch with the suppliers in Kenya. color. after the purchase is made a purchased sample is sent which is again checked to confirm the authenticity of the tea and when the tea batch that actually comes in after shipment is also tested to confirm it is the same tea without anything wrong in it. Procurement The procurement of tea is dealt by Tea and Blend department. The purchase of tea takes place in two ways. The tea which is selected is then bought in an auction or a private offer. We were astonished to know that the tea department tastes about 500 cups a day. However in a private offer the purchase is made on the SAS basis i. Primary Activities Inbound logistics The raw material for tea is provided mostly by Kenya. There are no bids and no auctions. subject of approval of sample. The auction takes place every week in a major city of the tea exporting country e. These samples are tested on various aspects of taste. In an auction what happens is that all major tea producing and exporting countries send catalogues and samples of tea to major tea industries around the world. The same procedure is carried out in checking the tea samples. tea gardens. The samples that are approved by the tea testing people are bought in the auction.system is centralized by the warehouse database so you get the updated information about the stocks. Tea tasting team tastes all the tea and comes to a joint conclusion. In both cases that are the auction and private buying. in Kenya it takes place in Mombassa. Tapal has representatives in all these major tea exporting countries who buy tea in the auction on behalf of Tapal. a renowned and old customer of Tapal.g. There is obviously a lot of samples coming in every week and lot of purchases being made. The purchase of tea takes place in two ways: on an auction and on a private offer basis. but one when we attach considerable weight to. Very Important: One of the first things we ask for. Not Significant: Not normally taken into account at all. wouldn’t consider supplier who doesn’t perform on this factor. Quite Important: A negotiable item. Don’t want it: Would prefer a product without this feature Synopsis: • The key issues identified were the Manufacturing Cost. We are already aware that the Tea prices are touching sky high and consumers are becoming very price sensitive in purchasing Tea for either further selling or personal INSTITUTE OF BUSINESS MANAGEMENT Page 33 . but is normally taken into account last. Price and Quality. Nice to Have: It could make the difference in a division.Relative Importance of Factors Absolute ly Critical 5 Price Competitiveness Product Innovation Product Quality Financial Performance Market Share Availability of stocks and Outlet Coverage Customer service/support Marketing Communication Manufacturing Cost Yes Yes Yes Yes Yes Yes Yes Yes Yes Factor Number Very Importa nt 4 Quite Importa nt 3 Nice to Have 2 Not signific ant 1 Don’t Want it 0 Suggested Definitions: Absolutely Crucial: Overrides most other considerations. but we may be prepared to negotiate on it. Availability 20% 10 10 TOTAL Has quality gone up/down (+/-)In past 4 years Relative Price today (Rs.Customer Complain Service 2.) Relative Price 4 years ago Rating Scale: 1 – 10 1 = Very Weak 100% 53 Up 460499/Kg 260370/kg 59 Same 490550/Kg 280385/Kg 35 Down 400470/Kg 240370/Kg 10 = Very Strong QUALITY & PRICE Non Price INSTITUTE OF BUSINESS MANAGEMENT This Busines s Comp A Comp B Page 34 .Brand Image 5. However. Since Tapal has a diverse network of distributors the general consumer base does not go too deep down into the complain requirements. The customer service is not a key requirement for the company as it has controlled by the field force. The current delivery period of Tapal is every alternate day when booked an order which is a great concern of product availability. The booking time and delivery is a major cause and concern of the customer which may shift the customer to other brands. Another key factor is the market share which can be achieved through extensive coverage. packaging and performance also play as a catalyst for purchasing decision. cost minimizing and optimal production capacity utilization. Quality 2. Color 3. Rating Against Customer Buying Criteria QUALITY & PRICE Non Price Attributes affecting Customer Choice PRODUCT RELATED 1. Input: Price is the heart of all factors for the consumer to choose any brand. good quality.Taste WEIGHTAGE This Busines s Comp A Comp B % 80% 30 10 20 10 10 9 8 7 8 9 4 8 9 8 9 8 9 8 8 6 6 5 5 8 3 2 SERVICE RELATED 1. improve the technology.Aroma 4.• • • consumption. Tapal is already working on horizontal integration. 7 0.5 0. quality and customer complaint services to break the clutter. customer is more concerned about the non-price factors which include the brand Image.3 0. Aroma.Taste WEIGHTAGE % 80% 30 10 20 10 10 6.6 5.8 1. Tapal plays a good role in quality attribute and have brands to satisfy varied consumer needs.Brand Image 5.8 0.8 1.8 SERVICE RELATED 1.6 2.4 0.5 0. • • • Input: Improve the Aroma. In the Service criteria the customers is more interested in the availability and complain service. Taste and Color.7 0.9 7 2.8 0.8 0.6 0.4 0.7 1.6 1 0.8 0.e. The main issue which needs to discuss is rapidly increasing product’s price that has already increased over 100% in last four years.2 After analyzing the customer preference and buying requirement we can safely conclude that: • The product constitutes 80% of the customer requirement i.2 0. Color 3.Aroma 4.8 0.8 8.8 1. Quality.Attributes affecting Customer Choice PRODUCT RELATED 1.2 TOTAL Inference: 100% 7.9 4.8 0. Tapal is weaken in customer complain area where the Unilever has a separate unit for that so if Tapal covers up this area then surely would have an edge over the rivals. Quality 2.Customer Complain Service 2.Availability 20% 10 10 1. INSTITUTE OF BUSINESS MANAGEMENT Page 35 . Energy Organization Structure Product Innovati on +++ ++ ++ +++ + +++ $ Price ++ ++ +++ Consum er Purchasi ng Power +++ +++ +++ +++ High Manufactur ing Cost + + +++ +++ +++ +++ ++ +++ ++ +++ +++ + +++ +++ ++ +++ + +++ Critical ++ Very High Impact + High Impact Synopsis: Analyzing each issue we conclude that the company must focus on critical issues and regenerate their operating strategies according to the changing purchasing power of the customer.Impact of Issues on Strategic Profile Compa ny Credit Policy + Issue Name Customers Market segments Products/Services Strategic Management Operations (Production/Logistics) Technology Distribution Channels Raw Materials. INSTITUTE OF BUSINESS MANAGEMENT Page 36 . Input: • Continues improving operation planning and optimize production cost at minimum level. . Quality Attributes. Low cost strategy would pass maximum benefits to consumers that improve their purchasing power Proper forecasting of demand and inventory management can reduce the impact of uncertain $ price Strong relations with supplier can reduce the $ price Value innovation would give competitive edge over rivals • • • Customers Buying Criteria: Price.%.• • Remove credit policy to improve ROI and hire self sufficient distributors who can easily invest....% Questio n its Cost Keep it up Availability Color Packaging Customer Complain Service Taste Relative Performance Rating Better Same Worse Quality Aroma 10% 20% 30% Impro ve Fast INSTITUTE OF BUSINESS MANAGEMENT Page 37 . Do not Sweat Attributes Important to Customer Input: Improve Aroma and customer complain services • • • Improve the quality to beat competition Expand coverage to provide convenience to consumers Build strong brand image through attractive packaging and win top of the mind of the consumer The Five Generic Competitive Strategies Type of Advantage Sought Lower Cost Broad Range of Buyers Chenak Dust Mezban Sachet Family Mixture Danedar Twin Pack Differentiation Tezdum 22gm Gulbahar SOG Selection Pack Mezban Dust 125gm Narrow Buyer Tapal Special INSTITUTE OF BUSINESS MANAGEMENT Teabag Segment Tapal Ice Tea or Niche Page Danedar Round 38 Teabag . Creativity and Ethical values in business Achieve leadership in all the categories of core business and diversify in areas which compliment the core business. Tezdum competes in this segment on the grounds of 22gm and better brand image and Strong Taste. Focused Differentiation Strategy This strategy has been only adopted by Tapal on Danedar Round Teabag which competes in the high end segment of Lipton Teabags. Jasmine and Elaichi to consumers who seek multi offers on brands. interior Sindh. Mezban Sachet/Packs.Inference: Overall Low Cost Provider Strategy This category comprises of Tea brands falling in the Dust and Mixture segments. Lemon. Provide products and services that meet customers’ requirements. coastal and thar belt by Tapal’s Family Mixture. Best Cost Provider Strategy The sole runner in this category is the Mezban Dust 125gm which provides value for money that has proved its success in the product line in the sindhi cultural lifestyle. Broad Differentiation Strategy This area has been competing on differentiation strategy with many customers choosing on the basis of getting less for more. These segments have been dominated in Karachi. distinctive brands with sustainably growth and value to appeal larger buyer Vision & Mission The management and the employees of Tapal Tea (Private) Limited is committed to: • • • Satisfy stakeholders and be a benchmark for Quality. SOG selection pack offers all three Tapal famous Green Tea flavors i.e. Input: Less for more. The Tea manufacturers compete with each other on the grounds of price and economy packs. INSTITUTE OF BUSINESS MANAGEMENT Page 39 . expectation and agreements relating to all aspects of Tapal Integrated Management System. Chenak dust and Denedar Twin Packs. Gulbahar is the only choice for making traditional Kashmiri Chai for consumers which has differentiation USP. Health. Ensuring that the Tapal processes and products are environment friendly and do not contribute to polluting the environments in any manner. 4. Prevention of injury and ill health by continuously identifying hazards and reducing risks to people. Competitive Innovation • Bring down the cost through horizontal and vertical business partners. To maintain market leading position and increase the sales in North Region by 5% in 2010. Establish effective arrangements for communicating with all stakeholders throughout the food supply chain regarding all applicable aspects of Tapal Integrated Management System. health and safety. statutory and other requirements that relate to Tapal products. achieve leadership in the beverage manufacturing industry which compliment the core business Strategic Intent Making Tapal the premium choice of consumers not only in hot beverage segment but also in other correlated segments. INSTITUTE OF BUSINESS MANAGEMENT Page 40 .• Define and update measurable objectives and continually improve the effectiveness and performance of the Quality. • • • • Strategic Vision To be a benchmark of Quality. in order to meet expected demand in coming 5 years. To increase localization by the end of 2011 in order to maintain and improve cost effectiveness. To strengthen the regional brands by brand building strategy 3. optimize the production capacity to meet the future demand • Apply six sigma in complete business processes in order to attain cost leadership Business Objectives and Targets 1. services. 5. Creativity and Value Innovation. Seek out the areas where new products can be introduce to diversify the core business Investing to increase production capacity. 2. facility and business. Adhere to all applicable legal. food Safety and IS Management system. Environment. Safety. The philosophy of doing it right the first time would be achieved through this method. attack plans. An integrated system to be devised where by the vendor/supplier and distributor would log in the details of the ordered product on the computer screen and the same would be available to the company plant office.9000 or other quality standard maintaining bodies. Increasing field force and distribution network. Modernize the company’s operations by acquiring greater technical expertise. Implication of Total Quality Management Techniques such as constant checks in through every stage of assembly line and final test passes through the professional test inspectors. generally meeting the prescribed requirement standard set preferably by ISO. and machinery required to improve the efficiency of production assembly and simultaneously through lead time management techniques such as maximizing stock delivery turnover. 9. reasons and even the frequency of orders and preference. The following measure would help slash the manufacturing cost on two key risks. To broaden export functions and prove and maintain product existence in International markets.6. This would ensure that the delivery process bottle necks are reduced and also an MIS can be generated to observe the delays. packaging materials. devaluation of local currency and unrealistic demand. This can be achieved through effective production processes and a strong link between the Logistics and distribution spread in the market. 7. fake activities etc. The plant office will start production. How? In Short Term • Through strategic partnership between vendors/suppliers delivering Raw Tea. To optimize the introduction of new products by developing products with new designs and features for youngsters segment. events organizing or more consumer engagement programs to be carried out through brand building and promotional activities to appreciate the brand hard core loyal. Regular audit Schedule of surprise inspection team to test the measures. each level of completion can be monitored through the intelligent system. • • • • • • • INSTITUTE OF BUSINESS MANAGEMENT Page 41 . Through organizing events such as road shows. Through continuously train and development of the front line workers and supervisors to ensure to meet the deadline and productivity. Subsequently a separate “SOP’s – Standard Operation Procedures” to be devised which would contain the details and timing of production at different stages of production Seek out for avenues such as Tea could be manufactured cheaply on the local grounds rather than depending on dollar price. 8. service and standards set up at Tapal exclusive distributions centers. Integrated Complaint Management System with 24 hours Call Center facility for Tapal Customers facing any complain to active resolving trouble like counterfeit. • • • Segmentation Variable of the Consumer Market Geographic Tapal has divided its operations in to two regions namely: South Region: South side looks after the Karachi.356 sq mi) Hyderabad population size is 1.994 sq mi) Size of Northern Region Multan population size is 4 million (approx). A structured Resource program to be devised emphasizing on intellectual and technical skills that can be made available in obtaining technology of specialized in manufacturing.315. This entity would achieve two factors. area is 3. One such development is the discouragement and discontinuance of wastages from the global impact scenario. and Islamabad.227 km² (1.• Constant Social Contribution and Environmental Reporting at Factory Site for the residents and workers health and safety and following and obtaining the Ethical Modules requires by the authorities (The above objectives pertain to the day to day business activity and need to be addresses on real time basis. area 4. North Region: North side includes Multan. while entering into a new untapped markets.437 sq mi) INSTITUTE OF BUSINESS MANAGEMENT Page 42 . The positioning of the each segment would be such that it would compete with the Unilever and Eastern Tea but would create an impression of better quality and value innovation without facing the internal canalization. This will benefit the Tapal Tea by milking to more demanding segments and production.843 till 2010.721 km² (1. With the added stress towards environmental protection.847.165 km² (1. firstly reducing considerable production cost and secondly exposing the company to an additional market which can be supplied with desired profit margins. CSR initiatives and Sustainability corporations need keep themselves aware of the global developments. Any delay or slackness in the above would lead to business losses in terms of revenue and repute) In Long Term • Achieve further capitalization and investment outlay production of more profitable segment and divest non profitable business units. Sukkur population size is over 1 million 5.275. Hyderabad and Sukkur. Lahore. Size of Southern Region Karachi population size is 19. We expect that the customer can be drawn towards each segment even if there were price war. Simultaneously Tapal will have to work out a strategy to reduce the prices of its above price products as they have major share but also focus on the economy packs as volume drivers by consistent in their supply. mostly bring by the unreliable south-westerly monsoon winds during the late summer.8–49.491.000.896. middle-upper and upper-upper Trendy. area comprises to 1. entrepreneurs & self employed. middle.8 °C at Jacobabad. Pride. family belongings.2 in).170/sq mi) Lahore 3. Hindus and Christians etc Pakistani 20 – 60 Male and Female both Cohesion families Labor.082. Business man. Demographics Age: Gender: Family: Occupation: farmer Religion: Nationality: Muslims.279/sq mi) Climate The climate varies as much as the scenery.0 km² (350 sq mi) Density of Southern Region Karachi 3.660/km² (9. simple.479/sq mi) Islamabad 880/km² (2. moderated by the influence of the ocean.9/km² (9. Patriotism Personality: Elegant. There is very little rainfall ranging from less than 250 millimeters to more than 1. with cold winters and hots summers in the north and a mild climate in the south. Cultural and Heritage values. Psychographic Social Class: Life style: lower.250 millimeters (9.Lahore population size is 8. The central parts have extremely hot summers with temperatures rising to 45 °C (113 °F). often falling below freezing. area 906. extrovert Behavioral INSTITUTE OF BUSINESS MANAGEMENT Page 43 . quality conscious. student. Officially the highest temperature recorded in Pakistan is 52. followed by very cold winters.9 persons/km²/km² Density of Northern Region Multan 838/km² (2. trying to differentiate themselves from others.772 km² (684 sq mi) Islamabad population size is 805.000 (1998).5/sq mi) Sukkur 175. How Customers choose: Customers choose Tapal through advertising. Tapal’s brands remains favorite around the country with its grape-nutty appearance. Strategic Canvas . meetings. evening get to gather. Why they prefer a product: As tea fulfills a core need of refreshment. Tapal Tea is the primary choice of tea lovers nationwide. Breakfast or any social meeting Potential users. promotional schemes & word of mouth. Modern Trades and the second is the institution sales where customers (institutions) directly buy the product from Tapal’s Out of Home Sales department (OOH) who directly maintains links with different institutions. USCs/CSDs. Since it proudly caters to the different tastes and preferences of people belonging to diverse lifestyles. In fact its popularity is such that other companies have launched their own versions of these blends.Past & Future INSTITUTE OF BUSINESS MANAGEMENT Page 44 .Occasions: User status: Usage rate: Readiness stage: Ritual. non users and hard core users depend upon need and consumption intending to buy Positive attitude Attitude towards product: Where customers buy: Tea is sold through two different places. rich golden color and strong refreshing taste. When customers buy: The consumers usually buy Tea at the start of the month in bulk amount for family usage or when the Tea desire strikes that can suffice them for that particular month or the commencing one too. one is the where customers directly buy the product from general retailers. print ads. but Tapal's remains the original and ultimate. brand positioning. 100% capacity utilization can reduce cost of production and thus offer competitive price in the market Social issues and CSR initiatives can strengthen the company image. customer preference.High The Strategy Canvas of the Pakistan's Branded Tea Industry 2005-2009 Price Premium Quality Extensive Coverage Delivery Time Eff icient ROI Production Capacity Recognized Brands Low Tapal Unilever Eastern Tea Clover Pakistan Loose Tea High The Strategy Canvas of the Pakistan's Branded Tea Industry 2010-2015 Price Premium Quality Extensive Coverage Delivery Time Efficient ROI Production Capacity Efficient SCM CSR Initiatives Low Tapal Unilever Eastern Tea Clover Pakistan Loose Tea Input: • Exclusive distribution who have extensive market coverage and willing to invest more in the business would increase the market penetration but the long term relationship must be maintain with value in return. attract more investors which would ultimately affect the business cycle. • • • INSTITUTE OF BUSINESS MANAGEMENT Page 45 . Company owned “Chai Shai Café” would give preemptive mover advantage in this business. 17 0.Cost Structure S.6 1.2 0. Kenya and Bangladesh.01 1.7 0.8 0. Tea Companies are importing Tea fully from Sri Lanka. Cost effectiveness achieved by increased localization. 86% which the company import from Sri Lanka. • • Optimal capacity utilization of plant can reduce expenses Implementation of TQM can improve the business infrastructure and lead to cost leadership in all grounds INSTITUTE OF BUSINESS MANAGEMENT Page 46 . heat and water Insurance Rent. as compared to its competitors. • • • Input: Selection of Supplier on the basis of price competitiveness can reduce the major part of the production Cost. These countries are relatively high annual Tea producer in the world.03 0.08 0. It purchases “premium quality” Tea from Sri Lanka.07 0. rates and taxes Repair and maintenance Royalty Technical assistance Traveling.2 0.04 0.011 0. The end result for them is increased prices.05 0. highest value adding component in the total manufacturing cost is Raw material. 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 Contents Raw Materials and components consumed Direct Labor Technical director’s remuneration Salaries.e. Conveyance and entertainment Postage and telephone Printing and stationary Vehicle running Depreciation Canteen Newspapers. Kenya and Bangladesh which in actual increase there costs tremendously as Tax.01 0. wages and benefits Employees’ severance cost Stores consumed Light. buy changing it Raw material Supplier source and auction. magazines and subscription Staff training Intangible assets amortized Other manufacturing expenses % contributio n 86 1. No.03 3 0.003 Total Manufacturing Cost • 100% For Tapal Tea.2 0.7 0.3 4. i. Kenya and Bangladesh Tapal Tea has reduced it costs. These players generally follow the Cost Plus and variable methods for pricing. • • Input: Both Low cost and differentiation strategies can give better pricing options to the company as well as to the customers to create competitive advantage. Fixed margin 3.Pricing Strategy • Unilever happens to be the trend and price setter for the whole industry.36% and 5-8% pass on Distributors and Traders respectively. Loose Tea has been smuggling through borders so mushroom players offer high margins to trade and create tough competition in the market. Clover Pakistan and Loose Tea its followers. i. Legging Indicators and Leading Indicators INSTITUTE OF BUSINESS MANAGEMENT Page 47 .e. The other major player in the industry. Eastern Tea. Tapal. Leading & Lagging Indicators [Company is focusing] Projects/Activitie s done Impact on Results Area of Focusing for tomorrow • New brands for children and youth • Tea bag markets • Diversification in Core business • European Market • Health conscious people • Diet plans • Children and youth who are trendy and want social change • Instant powder/energy Ready To drinks Introducing new brands Product development. Blind Test and preresearch has been done • Increase profit and market share • New market development New flavors in Green Tea Product is in testing phase Increase sales and market penetration New variants in Ice Tea Powder Lab test has done Flavors have decided and tested • Taking first mover advantage in the category • More revenues Implementation of TQM TIMS unit has established who will ensure the implementation of all areas Phase out SBUs having no profitability Disposed off Ice Tea CAN and Safari PF1 • Manufacturing Cost would be optimized • Reduce the wastages • Drop down Time delay in processes • Environment friendly company • Investment to be utilized in milking profitable brands • Warehousing Capacity improve Kaizen and Six sigma implementation New machinery would be purchased to cater key demanding brands INSTITUTE OF BUSINESS MANAGEMENT Page 48 . Action Plan S # 1 Input Customer Complain Center Hiring of new Distributors in North Diversify Business Ref Pg # 29 32 Strategy & Action Plan Establish Customer Care Department When & Where 1 QTR 2011-2012 Karachi 4th QTR 2010-2011 North Region 1 QTR 2011 Nationally st st Results To handle customer complains Build trust of customers Regenerate the product strategy Capture more market share Business growth and generate revenues to milk the other business units Market health indicators and opportunities identification To capture those customers who are willing to pay at different prices Increase the sales volume and company good will Increase Sales revenues as difference in rate of exchange Enjoy the major chunk. first mover advantage and leadership SWOT Strategy Canvas 2 SWOT Distributor Structure Business Scope SWOT Assumptions of growth SWOT Top 7 External Trends SWOT Competition Growth Matrix 29 26 Seek efficient and experience distributors Research new markets and opportunities Establish department or outsource the consultancy to seek out women cooking behaviors Market survey Competition Analysis Visit International Markets and Tea Exhibitions to seek out the demand and potential investors Develop brands for rural market with high leverage of cost Round Dust Teabags launch Introduce new unique variants in Green Tea by stretching health benefits of having it Build long term relationships with number of suppliers to grab the demand of Tea and make difficult to reach for competitors Implement Full pricing strategy 3 09 29 4 R&D Department New fillers in the existing product line 18 29 27 2011 Karachi 5 29 20 4th QTR 2010 Nationally 2010-2012 Mid East European countries 6 Export Market exploration Business Scope SWOT 09 29 7 Rural Market penetration SWOT Competition Growth Matrix Market Share SWOT Top 7 External Trends 11 18 29 1st QTR 2011-2012 South Region 3rd QTR 2011-2012 Nationally 8 Green Tea variants 29 27 First mover advantage Respond the uncertain demand of the market Increase market share Charge Premium Reduce cost of manufacturing and enhance margins 9 Tea Suppliers relationship SWOT Impact of Issues on Strategic profile SWOT Strategy Canvas Market Size Top 7 External Trends Relative importance 29 35 4 QTR 2011-2012 Srilanka Kenya 4th QTR 2010-2011 Nationally th 10 Pricing Strategy 16 29 27 32 INSTITUTE OF BUSINESS MANAGEMENT Page 49 . Select CSR initiatives that fully support the cause and brands 3rd QTR 2011-2012 Rural Areas INSTITUTE OF BUSINESS MANAGEMENT Page 50 .Factor 11 Availability of Products Tea Aroma and Quality Strategy Canvas Customer Buying Criteria Top 7 External Trends Market Structure of Industry Competition Growth Matrix 29 Train the Sale force and schedule to respond productive calls on daily basis Improve the blend of Leaf to enrich the aroma Through Research. mission and goals. multiple blending tests to improve the blend Work on communication platform to reposition the brand Distinctive brand communication to avoid cannibalization within Tapal brands Specific marketing mix planning for each brand Implement TQM and JIT to attain the low cost leadership Weekly 2011-2012 Nationally 1st QTR 2011-2012 Metro Cities 1st QTR 2011-2012 Karachi [initial phase] Shelf share will be improved Increase sales and revenues Capture competition Brands share 12 35 27 13 Improve Mixture Blend and clarify its Positioning 10 20 To take out form maturity stage and sustain growth 14 Brand Communicati on Strategy Market Share Top 7 External Trends 11 27 2nd QTR 2012-2013 All Regions Build brand positioning and specify segmentation 15 Low cost Strategy Competition Growth Matrix Distributor Structure Top 7 External Trends Cost Structure 20 25 33 1st QTR 2012-2013 Operation & Production plant Increase CM and price competiveness Increase Consumer value Increase firm goodwill and brand positioning Market share Growth Attract more financial investors and NGOs Publicizing the company CSR 16 Choose Cause and CSR initiatives Strategy Canvas 43 Find issue that best fit to the business vision.