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Lipton Marketing Case Study

In: Business and Management

Submitted By Rejina
Words 4465
Pages 18
Introduction
Lipton is famous for its various aspects. For instance it focuses strongly on innovation and has become a dominant tea brand. This point is proved by launching the varieties of products ranging from leaf tea to ready-to-drink tea products. Secondly it targets the mass market. Thirdly, due to its size, Lipton is seen as dominant player in the tea market as its size and quantity vary according to the buying behavior of the consumers. Lastly, the Lipton tea company employs professionals in tea growing, Research &Development teams, testing, blending as well as marketing. So to fulfill the criteria of the report, we have chosen Lipton tea as health and wee-being product.
The report highlights different marketing theories applied in the case of Lipton. The report also clarifies the position of it in the market. Furthermore it describes where and how the consumers want this product. The report is separated into four parts incorporating primary as well as secondary sources of data. The questionnaire approach is used as primary source of data. Books, journals and online materials are used as secondary sources of data.
This report gives some insights on Lipton as a brand of tea. So it can be referred in future for the further research. Most of the information is used based on the past events which can be seen as shortcoming of the report.

PART A

1. Introduction to major macro environment forces
Macro environment forces can be explained as external environment and characterized in two main ways. The first is that the elements of these external forced do not have immediate or sudden impact in the performance of any organisation. And the second is that if these elements influence an organisation, it’s impossible to control those (Baines, Fill & Page 2008, p.51). Kotler, Burton, Deans Brown and Armstrong (2013, p.142) note that ‘the macro environment consists of larger societal forces that affect the entire microenvironment’ (microenvironment refers to the internal forces which have strong influence in an organisation). These above described facts suggest that external forces pose higher level of risks for any organisation. There are six forces which make up the company’s macro environment. They are: demographic, economic natural environment, technological, political and cultural. The diagram below shows the forces of macro environment.

FIGURE 1 Major forces of macro environment (Marketers’ magazine 2010)

As we know that tea is the most widely consumed beverage. Targeting this fact, nowadays some companies are making effort towards innovating new products in the flavour of tea. These companies also argue that they are producing varieties of tea and claim to have benefits to our health. Lipton tea claim that it offers a range of choices in its products, such as black tea, bags or leaf tea, green tea, ice tea and chai tea.

Now, below is the description on how these forces affect our product i.e. Lipton Tea 2. Macro environmental factors affecting Lipton tea 3.1 Demographic
Lipton tea is affected by following demographic forces: 3.2.1 Age structure of the population
Tea drinkers are mostly adults and older people probably between the age of 15-60. “The potential market of Lipton is the people aged 10-60; it does not target the children” (University of Gujarat (UOG) 2012, p. 12). 3.2.2 Location
Location indicates towards the geographical segmentation of the market. It implies the distribution of people according to nations, regions, states, cities, municipalities etc. Tea as a hot beverage is mostly consumed in the cold areas. Lipton tea has targeted its product towards the urban areas such as in offices, hotels, restaurants, café and banks (UOG 2012, p. 11). 3.2 Economic
‘Economic environment consists of factors that affect consumer buying power and spending patterns’ (Kotler, Burton, Deans, Brown and Armstrong 2013, p.131). 3.3.3 Change in income
It plays significant role in buying Lipton tea. The price of tea varies according to its ingredients, access to it and other factors. Here access refers to getting it near to the main city or far from it. For instance, any product is expensive if it is transported to far regions than in main city. So, regarding this matter, if income of person, who drinks 8 to 10 cups of Lipton tea a day, declines then s/he will automatically decreases tea drinking habit. 3.3.4 Change in spending pattern
The sales of Lipton tea may decrease if there is recession. Typically, during recession because consumers tend to purchase fewer basic things and attempt to save money. In this situation, Lipton tea as not being basic thing will not be given importance. 3.3 Natural environment
Natural resources which are necessary as inputs by marketers or are affected by marketing activities is referred as natural environment (Kotler, Burton, Deans, Brown and Armstrong 2013, p.133). 3.4.5 Shortages of raw materials
The raw materials for Lipton tea comes from the environment. For instance, for making a tea bag, the company needs tea leaves and filter-paper. Let’s assume that this year due to high rainfall, tea leaves are less in quantity. This ultimately will raise the price of tea. 3.4.6 Increased cost of energy
As we know that oil is non-renewable resource and while processing tea, company needs it. If the world moves toward the peak oil, it will create serious problem in manufacturing the tea which leads towards increasing in the price of tea. 3.4 The technological environment
‘New technology is increasingly changing on the way that companies go to market through moves towards more email and web-based marketing and greater efficiency in direct and database marketing techniques’ (Sclater, 2005). In case of Lipton, it has website which advertises the products, gives information on the types of ingredients it holds and so on. Consumers do not need to go to the supermarket and ask about the quality and quantity of the tea. On one click consumers can access the information. This also has supported Lipton to increase the number of consumers.

2.5 The political environment
Marketing decisions are adversely affected by the political environment. Political environment consists of government agencies and pressure groups. On the top it consists of laws, rules and regulations. Nowadays legislation of a country as well as the rules of standard in international areas are playing great role in the field of marketing. For instance, laws which are designed to describe and prevent unfair competition are enforced in context of Australia by the Australian Competition and Consumer Commission and also by the Foreign Investment Review Board if there is involvement of a foreign organisation (Kotler, Burton, Deans, Brown and Armstrong 2013, p.136). “The political environment has undergone three changes that affect marketing worldwide: increasing legislation regulating business, strong government agency enforcement, and greater emphasis on ethics and socially responsible actions” (Kotler, Burton, Deans, Brown and Armstrong 2013, p.142).
In case of our product, Lipton, if there is some change in laws regarding the increment of tax then obviously the price of tea will be affected. Let’s assume another situation, if laws are formulated that the brand should stick in a single product, and then certainly Lipton which produces varieties of teas will be affected.
2.6 The cultural environment
The cultural values and perception plays important role as external force in marketing. The people living in a certain cultural group are guided by its values. For instance, in my home country Nepal, the consumption of beef is regarded as a great sin because we worship the cow as a goddess. So, the planning of starting the business of beef burger will be the worst idea. But in context of Australia this idea would be the best and might be famous brand among Australians. So, the marketing strategies should fit according to the values and beliefs of the people.
In the context of our product, Lipton of which Unilever is the main company is always launching the products which are based upon the perspectives of the people.
Therefore Lipton Tea as the product is also affected by the external forces. These forces do not have direct effects as the micro environmental factors but they can be felt and seen in the company.

References
Basins, P, Fill, C and Page, K 2008, Marketing Oxford University Press, Press Inc, New York.
Kotler, P, Burton, S, Deans, K, Brown, L and Armstrong, G 2013, Marketing, 9th edition, Pearson Australia, Frenchs Forest.
Sclater, I 2005, ‘The digital dimension’, The Marketer, May, 22-3.
Scribd, (2015). Report on Lipton Tea a (m.com .x). [online] Available at: http://www.scribd.com/doc/80232978/Report-on-Lipton-Tea-a-m-com-x#scribd [Accessed 7 Jul. 2015]. University of Gujarat 2012, Report on Lipton Tea, UOG, viewed 4 July 2015 http://www.scribd.com/doc/80232978/Report-on-Lipton-Tea-a-m-com-x#scribd Part B

Australian Tea Market
Australians consume more than 22 millions of tea per day. So this consumption behaviour of Australians shows that there is a high demand for tea and hence Lipton Tea is the one capturing the highest percentage of market. Research shows that out of five, four Australians basically those doing” nine to five” job take up to three tea breaks in a day. Consumers in Australia have now been more tempted towards hot drinks and prefer more premium products in the tea category. They choose tea over product categories such as juice and other carbonates. This is because of the reason that tea has refreshing as well as part of a healthy lifestyle. The value of Australian tea category has a good future forecast. So, under this product category, first one is Lipton brand from Unilever, second is the Dilmah and followed by Tetley are the favourite tea brands amongst Australians.

Market Size
Unilever Australia has a dominating sales of RTD (ready to drink) tea in Australia holding about 70% of retail volume shares through its Lipton iced tea brand. Unilever has a total of 35% of market share having three particular brands i.e. Lipton, Bushells and Lancho with Lipton owning 21.6 % of the overall market. Lipton has acquired high benefit of distribution of its product widely across Australia. It is in its competitive advantage because of the implementations of promotions including sample distributions in different segmented locations. It has played relatively well in media also and has around not less than 500 million likes in its local facebook page.

Market Growth and Expansion
There is an increasing trend in the sales of Lipton Tea. As known and felt, consumers are now more conscious toward their health and wellness so they prefer tea by knowing its advantages to their health over any other soft drinks or juice. As this health concerns develops more in a consumer, it will give more rise to the sales of tea product ultimately an increase in the overall demand and supply. So, Lipton tea is offering this features and health and wellness through their products including different product lines such as Lipton Ice Tea, Lipton Green Tea, Lipton Black Label Tea and so on.
Lipton has a high increase in its sales just because of its high anti oxidant and sugar content. Likewise its continually introducing new flavours to the tea market which is also attracting more and more tea drinkers towards it and as a result it’s now in the top most position in the Australian Tea Market.

Factors Affecting the Market
So, despite healthy image of Lipton, Australians are starting to be more aware of the high-sugar content in RTD tea. So in near future this tendency of the consumer probably can push for healthier versions of the drink. So from one side, consumers being more conscious is advantageous for the expansion of its tea market but in the long run, if the dynamic environment is not adjusted by Lipton, then it can have negative effects upon its market expansion in the long run.

Segmentation Bases Geographic segmentation | | Country | Australia | Cities | Major cities of Australia | Density | Urban | Climate | Cold |

Demographic Segmentation | | Age | 30 years and above | Gender | Male, Female | Family Size | 1-2, 3-4, 5 and above | Occupation | Service and White collar workers |

Behavioural Segmentation | | Occasions | Any occasion | Benefits | Quality, health benefits and flavours | Loyalty Status | Considerably High |

Psychographic Segmentation | | Social Class | Middle and upper class | Lifestyle | Believers and Achievers | Personality | Energetic |

Target Market Reflecting Market Differences

Characteristics- tastes , aroma and strength: Flavoured Health Segment is the fastest growing segment for today’s Lipton Tea Market because of the growing preferences of the consumer over the health and well being product. So for this Unilever introduced “Lipton Green Tea” which is particularly targeted to those who is more health conscious as the age group between 30years- above. Because in this stage people are more likely to suffer from different diseases such as high blood pressure, diabetes, in against to which this product acts as a precautionary measure. Green tea is the fastest growing sub segment of flavoured health.

Test of Viability
The segmentation done on the basis of demographic factors such as age, gender, family life and occupation can be regarded as viable because we can know from its demand that how much people have a deep trust on this product. Many diet conscious people prefer this product because it is also fruitful to lose extra weight.

The segmentation on the basis of geographical locations can be regarded viable because the demand does get affected according to the locations of the consumers. There will be less demand for tea product where weather is hot. So less focus is given on such areas. Further people living in urban areas that have basically 9-5 jobs demand more tea during their tea breaks. So taking care of this, target market is segmented.

Behavioural segmentation can be regarded as viable in a sense that people do not drink tea occasionally. They drink out of their regular habit. They feel some kind of emotional attachment with the product so they buy it.

It is targeted to middle and upper class because the price is relatively higher so lower class people may not be able to afford. So this is on the basis of psychographic segmentation. Similarly those who are cultured and energetic are more prone to drinking tea.

Bibliography:
Foodprocessing.com.au, (2015). Datamonitor report: Hot drinks in Australia to 2013 :: Products :: FoodProcessing. [online] Available at: http://www.foodprocessing.com.au/content/training-education/product/datamonitor-report-hot-drinks-in-australia-to-2-13-1392314782 [Accessed 7 Jul. 2015].
Euromonitor.com, (2015). RTD Tea in Australia. [online] Available at: http://www.euromonitor.com/rtd-tea-in-australia/report [Accessed 7 Jul. 2015].
Mynewsdesk, (2015). Unilever and its Lipton brand dominate the Australian RTD tea market. [online] Available at: http://www.mynewsdesk.com/uk/pressreleases/unilever-and-its-lipton-brand-dominate-the-australian-rtd-tea-market-936991 [Accessed 7 Jul. 2015].
Anon, (2015). [online] Available at: http://www.tafco.com.au/images/pdfdocs/GreenTeaGrowersGuide.pdf [Accessed 7 Jul. 2015].

Part C

Strategies, Objectives, Strengths and Weaknesses of the competitors

Lipton’s major competitors are Snapple, Nestea and Tetley. Flowing are their strategies, objectives, strengths and weakness.

Snapple
Snapple is the product of Dr Pepper Snapple group located in North Carolina. It strategy is to build as a main flavored drinks and to strengthens its position. The main objective is to build and enhance its brand loyalty and also to show that it is different from their competitors.The main strength of Snapple is it is the first market non-carbonated drinks and also has the brand associations. Snapple has the weakness that its flavors are not sold in every place. Snapple sponsor America’s got talent of the NBC show as a official beverage sponsor.(Dr Pepper Snapple Group)

Nestea
Nestea major strategy is to focus more in packaging based marketing strategy. This company team up with coca cola to ensure a strong global distribution system. The strength of Nestea is it positions its product as an ideal healthy and ready to drink products. It mainly focused in packaging based strategy so it failed to offer varieties’ for customer. Nestea also adopted a pricing strategy higher than its competitor due to this weakness Nestea lost many of its consumers. (UKessey, 2015)

Tetley
Tetley’s strategy is to focuses in product innovation, global branding and to be success in new channels and countries. It is strongly present globally and is healthy and tasty. This product is available in several countries with simple and clean products. Its weakness is their products or ads are not focused on young people.(Tata Global Beverages, 2015)

About the competitors

Nestea, Snapple, and Tetley are Lipton’s major competitor because they respectively cover 16%, 7.5% and 2% of the Australian tea market shares. Nestea is the product of Nestleand team up with coca cola to compete with Lipton, as Lipton is team up with PepsiCo. Nestea focused more in packaging based market strategy. It marketed its product and position as a healthy and ready to drink beverage. Nestea has strong financial base. It has got many cost-saving programs in place and has been able to afford sizeable investment in brand development.(Marketing plan of nestea, 2015)
Snapple is a product of Dr Pepper and it has the strong brand portfolio that makes it popular brand. It also has the strong brand reputation and brand awareness. This company established long relationships with customers.
Tetley was first manufacture in united Stated. Later Tata Global Beverages wholly owned the company. Tata Global Beverages is the second largest manufacture of tea after unlevered so this is one of the competitors for Lipton. Competitive positions

To examine the competitive strategies it should be based on the role played in target market. There is a leader, challenger, follower and nicher. Leader should have the highest market share. Among the four companies, Lipton is the leader with 72% of market share in its hand. Nestea is the challenger with 16% of market share and is fighting hard to increase the market share. With 7.5% of market share, Snapple is follower. Tetley is the nicher with 2% of market share and 2% are others. (Iced tea to feel the heat)

Figure 2: Competitive market positions

Competitive strategies of Lipton

As every business, Lipton has their own strategies for protecting and expanding their market and market share. Some of them are:

* Customers are the king of the market:
The first priorities of Lipton tea is a customer, all customershave different requirements of their own. Like trade customers expect tremendous service, accurate information and timely Delivery. When consumers make their choices they think about theirflavor, appearance and cost. Lipton knows what consumer seek for and respond to their expectations rapidly and effectively. All customers however, expect value for their money in form of good quality at a reasonable price.(LIPTON ICE TEA final report1)

* Quality as key component:
Quality is one of the key component as quality is what the customer always look for. If they are not satisfied with Lipton, they will look another brands. Lipton provides greater value in every product class and market sector. They must observe and learn from its competitors. If their competitor did better than them, they must improve their performance. So that, they can achieve competitive advantage through quality product

* Price strategy:
Pricing strategy in market research is to identify the optima price for the product. Lipton always uses four P’s pricing strategy (Product, place, price and promotion). The pricing strategy tends to be one of the more critical components of the marketing mix and is focused on generating revenue and ultimately profit for the company.

* Health related benefits:
Lipton is renowned for its health benefits that are different from other tea beverage and soft drinks with high sugar. This tea have flavonoid that helps body to fight with free radicals that also helps to fight with different disease. Health related a benefit is one of its benefits that have its competitive advantage.

References

DrPepperSnappleGroup.com, (2015). Dr Pepper Snapple Group - Vision - vision. [online] Available at: http://www.drpeppersnapplegroup.com/company/vision/ [Accessed 7 Jul. 2015].

UKEssays, (2015). Case Study Lipton Ice Tea Marketing Essay. [online] Available at: http://www.ukessays.com/essays/marketing/case-study-lipton-ice-tea-marketing-essay.php [Accessed 7 Jul. 2015].

Tataglobalbeverages.com, (2015). Tata Global Beverages - Our strategy. [online] Available at: http://www.tataglobalbeverages.com/about-us/our-strategy [Accessed 7 Jul. 2015].

UKEssays, (2015). Marketing plan of nestea. [online] Available at: http://www.ukessays.com/essays/marketing/marketing-plan-of-nestea.php [Accessed 7 Jul. 2015].

Adnews.com.au, (2015). Iced tea to feel the heat - AdNews. [online] Available at: http://www.adnews.com.au/843FC13B-36E4-484F-86FB4DA92C026E7E [Accessed 7 Jul. 2015].

Report1, LIPTON ICE TEA final report1. [online] Academia.edu. Available at: http://www.academia.edu/5010708/LIPTON_ICE_TEA_final_report1 [Accessed 7 Jul. 2015].

Part D
Differentiating Competitive Advantages (Points of Differences)

* It is a Multinational company which is certified from ISO 14001, Member of Roundtable on Sustainable Palm Oil (RSPO), GRI Sustainability Reporting and Climate Counts: Soaring. * They have highly effective human resource management who are enthusiastic, creative and rigorous. They can work confidently in teams and work from the hunger of success. Additionally, they all work using their highest professional excellence and integrity. * It offers high quality products. It contains natural ingredients in all its flavors. * In its packaging process, they give importance to Sterile Filling process which means that it won’t create any damages to the quality of tea. * It offers products as per the taste of people in a particular country taking into considerations the cultural and economical factors of that particular country. It does not supply those products that are forbidden by law. * Lipton tea is renowned for its healthful properties which is different from other beverages and soft drinks that represent the epitome of sugary soft drinks. It contains flavanoids that help body to fight against the free radicals that helps in contributing the diseases like heart disease and cancer. It is also beneficial to strengthen body’s immune system. It also has positive effects on weight loss specially Lipton Green Tea. * Lipton tea provides protective falconoid antioxidants that combat oxidative stress in the body. Oxidative stress is the reason for cancer and other diseases. * It regards its customers as the first priority. Their main aim is to provide world class service to its customers. It regards its customers as the central of their business and always respects their preferences.

Perception of Company

The company wants its product to be known as beneficial from health point of view. Consumers often think that drinking tea will lead to dehydration but the fact is that the amount of caffeine in tea actually helps in hydrating the body.It wants to meet the expectations of every tea lovers. It expects the tea drinkers to feel great in mind and body. They want to act as health caring, vibrant and active in the minds of their target market. It believes that it applies modern distribution techniques. It does not want to affect the environment negatively so it takes the approach of sustainability. For instance it is not using pesticides in its farm so it’s really transforming farms and lives.

Perception of Customers

Customers now are becoming more conscious and do not like to wait for long. Thus there is a high need for the products that are readily available. People will only buy those product that are conveniently available so it won’t create any difficulty at the time of purchase. Consumers also perceive the product as a support for their good health. It should use high quality of materials and products and keep improving it in the long run.

Consumer also perceives the product to be produced from the sustainable ways that won’t harm the environment as well as the society. The sustainability can be attained though following ways * Creating awareness * Being credible * Making the products and services easily available

Positioning and Perceptual Maps

Figure 3: Positioning Map of Lipton

Figure 4: Perceptual Map of Lipton

The positioning map indicates that Lipton is portrayed as a high quality product with high price, which is mostly targeted towards the middle and upper class consumers. They have positioned their product in the mind of consumer as a new value added to the tea offering taste as well as core benefit of health.
The perceptual map shows that the consumers prefers high quality but with low price. This marketing strategy can give rise to more demand since it increases the purchasing power of the lower class people also.

Evidence Of Primary Research

So for this we conducted a survey that was a short list of questions asked to 10 different people. We conducted this survey in Woolworths, Auburn where we asked to fill out some set of questions related to the Lipton Tea. From this survey, we got the following findings: * 5 out of 10 preferred Lipton green tea more because of its health benefits and help in weight loss. * 2 out of 10 said that price should be lowered a bit. * Almost most of their answer was drinking tea is their daily habit so they are more brand conscious and choose Lipton as their daily routine. * 2 out of them said that they choose Lipton because it can be conveniently bought and it’s an instant and ready to drink beverage.

Bibliography
Ratings, L. (2015).Lipton (Loose Tea) Ratings & Reviews | Best & Worst Products | GoodGuide. [online] Goodguide.com. Available at: http://www.goodguide.com/brands/215655-lipton-loose-tea-brand-product-reviews-ratings [Accessed 7 Jul. 2015].
Slideshare.net, (2015). Hrmunileverbangladesh. [online] Available at: http://www.slideshare.net/hossam08/hrm-unilever-bangladesh [Accessed 7 Jul. 2015].
Diet Spotlight, (2010). Lipton Tea Review | Does It Work?, Side Effects, Buy Lipton Tea. [online] Available at: http://www.dietspotlight.com/lipton-tea-review/ [Accessed 7 Jul. 2015].
Unilever.com.au, (2009). Unilever Australasia - Attitudes to sustainability | Media centre | Australasia. [online] Available at: http://www.unilever.com.au/media-centre/pressreleases/attitudestosustainability.aspx [Accessed 7 Jul. 2015].

Conclusion

By seeing at the benefits of the entirely new concept and the new product in tea industry, Lipton tea has different benefits and because of the assessment through the questionnaire and the market research it is obvious that this product is gaining the expected market share. This healthy and nutritious tea with different new flavors will be suitable for the healthy, physical and mental growth. It can be possible that this product may continue to be the market leader as it keeps on introducing new concept but through conscious survey it is obvious that this product suits the level of consciousness of all adults.…...

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