Roles of branding and its impact

4392 words (18 pages) Essay

1st Jan 1970 Marketing Reference this

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Lipton has its own tea estates and tea research facilities, employing over 80,000 people. It maximizes consumer and customer understanding, by giving the tea tasters extensive training through frequent travels to tea growing areas throughout the world to gain knowledge in the harvesting, production, procurement, blending and tasting of more than 3,000 types of tea. In addition, it sources tea from as many as 25-35 different countries, to ensure consistent taste and quality.

Corporate Milestone

In 1890, Sir Thomas Lipton founded Lipton whom was considered the father of modern advertising.

In 1893, Sir Thomas Lipton established the Thomas J Lipton Co., a tea packaging company with its headquarters and factory in Hoboken, New Jersey

By 1898, Lipton had shops all over Britain.

In 1915, the present name of the company was adopted, and it was incorporated in with Sir Thomas Lipton as the president.

Now, Lipton is owned by Unilever, which has committed to quality for over 105 years.

Today, Lipton is the world’s leading tea brand and present in more than 120 countries, and is also one of the few companies that employ¬†expert tea tasters.

Company’s Mission

Bring our wealth of tea knowledge and international tea expertise to customers throughout the world and continuously seek new and improved ways to deliver the best tea experience for our consumers.

Goal

To meet the everyday needs of healthy tea everywhere.

Objectives

The company’s objectives are sustaining profitable growth, creating long-term value for the shareholders, people, and business partners, commitment to performance and productivity, working together effectively, and a willingness to embrace new ideas and to learn continuously.

Situational Analysis

Market Analysis

Market Size and Trend

2003

2004

Health Conscious

47%

67%

Non Health Conscious

53%

33%

Source: http://www.hpb.gov.sg/hpb/default.asp?pg_id=1441

Studies have shown that the number of “health conscious” people has grown rapidly within Singapore in the past two years and the number is still growing.

Therefore, there is a high potential market for the diet decaffeinated tea as caffeine can cause increased heartbeat, respiration, basal metabolic rate, gastro enteric reflexes, and the production of stomach acid and urine increases the risk of developing chronic diseases such as certain cancers and heart disease.

Nowadays, the trend is to keep fit and healthy, especially for women who want to keep slim. So the diet and decaffed tea will be in hot demand.

Market Competitors

The market competitors of Lipton Singapore are Waitrose Originals, Twining, BOH tea, Gold Kili and Nestea. Although these competitors offer a similar range of tea product as Lipton, but currently, there is no such tea product in the market that has Lipton DD Mix. For now, they are unable to match Lipton’s advantage with this new value-added product. But in the foreseeable future, these competitors might possibily copy the new product after its launch, and sell it at a much lower price.

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Company Analysis

Lipton has been in the industry for more than 100 years. Besides being the market leader in the tea industry, it also has a good brand image and reputation, thus ensuring a certain degree of customer loyalty among the consumers.

Product Analysis

Lipton product ranges from black to green tea filled with different flavours, to different healthy tea like diet and decaffeinated. It adapts different ways of packaging in presenting teas to consumers for different target markets (i.e. tea bags, bottled tea and tea mix).

Lipton Diet Decaffeinated Lemon Iced Tea Mix (Lipton DD Mix) is a bottled powdered drink that enables consumers to mix up to 40 cups of Iced Tea. It is also available in a dozen convenient packets in a box.

Target Consumer Analysis

Lipton DD Mix caters to the health conscious people who are among the young and the adults. Some of consumers may have health issues such as high cholesterol, allergic to caffeine and have diabetes can consume this diet and decaffeinated tea.

It also caters to those concerned about their diet, and the food or beverage they consume, to benefit their health.

S.W.O.T

The company’s marketing environment is made up of various sectors and forces within the organization. The following shows the various strengths, weaknesses, opportunities and threats of Lipton.

Strength

Lipton is the only company that has tea, which is both diet and decaffeinated. It may take competitors some time to produce this range of product. This product line extension has some important benefits:

Firstly, the same sales force can often be used to sell the new products and hence, increase sales efficiency (i.e. sales per salesperson)

Manufacturing capacity can be better utilized and lower the allocated manufacturing overhead for all brands

Greater advertising efficiency when product line extensions are built off an existing brand name which is known for its quality

Faster acceptance of core brand extensions because the flanker brand is associated with a well-known brand.

Weaknesses

Lipton already has a wide range of products. The public may not necessarily accept this new product or the market volume might not be big enough. Furthermore, it might cannibalize Lipton’s other products.

Opportunities

With this new product, Lipton can further cover another segment of the tea market and reinforce its leader position in the industry. Currently, there are no such teas available. It will also portray Lipton as an innovator and trendsetter.

Threats

There are plenty of teas from other brands offered to consumers such as Chailatta Tea, Black Tea, Chinese Tea, Ginseng Tea, Organic Tea, and Herbal Tea. Slimming teas have also become more popular among the young adults. With more and more substitute beverage drinks available in the market, competitors compete with one another for more market shares.

Target Market

With the increasing expectation and demands of consumers, the challenge of companies in today’s tea industry is to offer consumers a better product

Market Segmentation

Market segmentation is the process of identifying a specific set of characteristics that differentiate one group of consumers from the rest.

The market for tea can be easily segmented on the basis of taste and price. Some individuals prefer the highest grade of loose-leaf tea because of its taste, while others who cannot tell the difference in quality would buy primarily based on the price, brand image and availability.

Lipton uses a few main bases for segmenting the tea market in Singapore, namely, demographic, psychographic and behavioral segmentation.

Demographic segmentation

Demographic segmentation divided the market into groups based on variables such as age, gender, income and education.

Age, Gender & Income:

The total population in Singapore is approximately 4,2403,000. 45.8% of the Singapore labor force is female and the rest are males. With growing household income, there is an increase in buying power. With a healthy lifestyle becoming a trend in Singapore, more people will buy and try this new product, to feel good and to keep fit.

Education:

Among those with secondary or tertiary education, there is awareness on the preferred and healthier choice of beverages they consume. These consumers gain their knowledge on “diet tea or decaffeinated tea” through books, Internet and magazines articles, etc. And they are willing to pay a premium price for this tea.

Psychographics segmentation

Psychographics segmentation divided the buyers into different groups based on social class and lifestyle.

Social Class, Lifestyle:

Through the government publicity campaigns, it has encouraged people to lead a healthy life style. Hence, tea is one of the choices for healthy beverage.

For the young adults, they have discovered the pleasure of sipping a variety of black and green teas, and tea is not only a fresh, hip beverage, but a healthy one too. Women between the ages of 30 to 50 are still the main tea-drinking consumers, who usually drink it during leisure-time breaks and in social outlets. Among the men, who comprises of an increasing segment that is seeking the enjoyment of tea. They gain their awareness of the benefits of tea drinking through press reports. Most of them consume tea for health reasons, as well as to relieve stress.

Our new Lipton DD Mix will be the most preferred among others teas, as it has diet (low calories count), decaffeinated (caffeine free), natural lemon flavor (vitamin C), more value for money as it has three in one in just a cup of tea.

Behavioral segmentation

Behavioral segmentation divides buyers into groups based on their knowledge, attitudes, uses, or response to a product, based on occasion, benefits and loyalty status.

Occasion:

Buyers can be grouped according to occasions when they get the idea to buy, actually make their purchase, or use the purchase item.

Tea is most often consume at breakfast, but Lipton tea growers have promoted drinking tea as a cool and refreshing drink that can also be consume at anytime of the day.

Benefits:

Lipton tea naturally contains flavonoid antioxidants that protect the body against free radicals. It helps to maintain a healthy cardiovascular system. Our new tea also contains vitamins, low calories count (aids to promote healthy functioning of the stomach and intestines), and no caffeine.

Loyalty status:

Lipton Tea offers a strong portfolio of brand. Today, most people associate Lipton with tea because of the ultimate power of a brand; that is both modern and rich in heritage.

Target Marketing

A target market consists of a set of buyers who share common needs or characteristics that the company decides to serve.

Differentiated Marketing:

Hot or cold, ready-to-drink, powdered or bagged, black or green, tea is one of the healthiest beverages on earth, and as such is becoming increasingly relevant to the growing number of consumers leading a healthy lifestyle. With the new launch of Lipton DD Mix, it caters to those who want to enjoy a cup of tea without spending much and feels slim and healthy at the same time.

Market Positioning

Positioning is to arrange a product to occupy a clear, distinctive and desirable place relative to competing products in the minds of the target consumers. The competitive position adopted should be based on matching product attributes to customer needs.

Due to the pressure of a fast paced lifestyle, many Singaporeans do not watch what they consume and that result in health issues. Studies have shown that 16.2% of the young and the adult Singaporeans are obese and this is the second largest health problem Singapore faced.

Therefore, Lipton DD Mix will be the most preferred among other beverages, as this tea is the first in Singapore that has 3 in1 benefits (diet, decaffeinated and lemon taste) when consumed. It aims to target on the differentiated market of today’s health conscious consumers of the young and the adult.

Marketing Mix

The goal of a market positioning strategy is to create a product-price position that is attractive to target customers. However, a highly integrated product-price positioning strategy will also require an effective place-promotion marketing effort which will help the company build a successfully target market positioning strategy.

Marketing decisions generally fall into the four controllable categories (4Ps): Product, Price, Place (distribution) and Promotion.

Product (Characteristics)

Lipton DD Mix is a fast moving consumer good.

A sugar-free drink that can quench thirst in an instant, contain protective antioxidants and it is a great tasting way to get necessary daily fluid intake.

A pioneer product in Singapore with the hope of capturing the health conscious tea drinkers.

A product under the world’s tea leading brand-Lipton.

Price (Premium Pricing)

The perceived quality and value of a product is usually indicated by the price

Adopting a premium price policy while still delivering superior customer service until competition can match its source of competitive advantage (i.e. product differentiation). During this “monopoly” period, this premium pricing is sustainable because competition cannot match Lipton’s relative advantage. Lipton should pursue production cost (per unit) reduction and be in strong position to compete at a lower price level when competition matches their source of advantage.

Providing allowances for launching and future sales promotion without sacrificing too much profit.

To ensure a meaningful profit for retailers, wholesalers and company.

Place (distribution)

Distribution is about getting products to customers.

Penetration of existing or new channels: to appoint or recruit wholesalers and retailers to distribute this new product to customers in Singapore.

Order processing: to set an efficient and effective way for distributors to order the product as needed.

Improvement of organizational transportation and logistics system to support distributors for launching the new product, and to better achieve distribution objectives.

Promotion

Promotion represents the various aspects of marketing communication, that is, the communication of information about the product with the goal of generating a positive customer response. To generate a high degree of awareness of the product, it is extremely crucial to communicate to the targeted audience. The benefits derived from using the product must be made known to targeted consumers by:

Advertising- by means of TV media, Radio, Newspaper, Magazines and Posters

Sales promotion- carried out attractive promotions when first launching the product to draw as many customers as possible.

Sponsorship- in entertainment activities to strengthen the company’s public image and reputation.

Marketing objectives

Product:

For the total market share, the objective is to achieve 15% by the end of the first year of product launch.

Price (Premium Pricing)

Selling price: S$11.50 per bottle (40 servings), S$4.50 per box (12 packets) and $1.80 per bottle “Ready-To-Drink” (500ml). This pricing has considered some factors like: Waitrose Original Blend Decaffeinated Tea (relative bigger size-80 bags), a close competitor, is priced at S$10.95 and Lipton Green Tea (similar size-50 bags) is priced at S$6.50 in the market.

At the beginning of product launch, we can offer attractive discounts in the short-term to persuade consumers to buy (lowering the “Risk” for consumers)

Place (distribution): Extensive distribution

The main launch is to achieve 80% coverage of supermarkets and convenience stores in Singapore.

Promotion:

The objective of promotional programs is to create an unforgettable impression of the product in the minds of our targeted consumers.

Awareness- through our intensive promotional program, we aim to achieve an awareness of 80% by the end of the first year of product launch.

Marketing strategies

Lipton DD Mix is a new product in the Singapore market. We intend to adopt a Rapid-Penetration Strategy to launch the new product at a low price (offering attractive discounts to lower the price temporarily) and spending heavily on promotion. Heavy promotion will boost the product’s image as well as convincing consumers to buy the product. This strategy can bring about the fastest market penetration and the largest market share.

Product

Product class- a relative high-class product for those who know its value of quality.

Branding- a meaningful brand name “Lipton” reflects on the high life standard among the public.

Packaging- an attractive packaging brings a perception of brightness, vitality and fun with natural goodness to enhance consumers’ preference for the product.

Price

We intend to implement a “Price leadership” strategy for Lipton DD Mix. This pricing strategy offers the following advantages:

To reinforce its leader status in Singapore

Adopt a premium pricing to reinforce its “uniqueness” and “premium image”

Offer attractive trade discounts to wholesalers or distributors and ensure higher profit margin (relative to other brands or products) for them. Get their “buy-in” and “entice” them to push sales

Place (distribution)

Market coverage strategy uses selective distribution from existing or new channels for launching this new product because of the relative high selling price. For example, those supermarkets like NTUC, Cold storage, Carrefour and convenience stores like 7-eleven, Cheers, which possess strong potential to sell the product well, are selected.

Offer higher discounts to distributors to encourage them to carry the new product for resale.

Promotion

Promotion consists of both advertising, sales promotion, and public relations. Advertising offers reasons to buy a product; sales promotion offers reason to buy it now. Sales promotion consists of short-term incentives to encourage purchase or sale of a product. No matter how good a product is, consumers still require some form of persuasion in order to convince them that they actually need the product. Our promotional strategies involve the use of the following vehicles:

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Advertisement: “high reach” strategy

Advertising is the use of paid media by seller to inform, persuade and remind consumers about its products or organization. Examples of advertising medias include: TV, Newspaper, Radio, Health Magazines, Computer related Magazines, Outdoor transportation such as on public bus, MRT and taxis, etc. With a strong core brand name (i.e. Lipton) and a well-established distribution network, Lipton can consider using mass media like TV, Newspaper and Radio to advertise about its new product offering. The frequency of advertising in TV, Radio and Newspaper must be intensive especially for the first 6 months of product launching to create an excitement in the market. This intensity will be gradually reduced but the continuity must be maintained to carry on the reminding effect.

Sales promotion

Occasional sales promotion is critical, as it is useful for new product launching, it will be conducted to draw customers as well as to generate high sales volume. To avoid dampening the brand image, offer a reasonable discount for the first several months of launching the product to attract consumers, instead of lowering the price for a long-term. A Purchase-With-Gift method is also recommended (e.g. giving out a free bottle mixer with every package of Lipton DD Mix purchased).

Personal selling

To station sales promoters at all selected supermarkets in order to create a “push” effect and to invite valuable feedback from the consumers at the beginning of product launching.

Public relations

Public relations: Build good relations with the company’s various publics by obtaining favorable publicity, building up a good corporate image, etc. Occasional sponsorship of entertainment programs (i.e. health seminars) will help the company to boost its reputation and relationship with the public. This in turn will give the organization a good public image. This strategy will help to reinforce consumers’ mind-set (Lipton product is very good) and convince them to buy the product for instance, sponsoring the annual National Healthy Lifestyle campaign held once every year.

Action plan and Implementation

Implementation (action plan):

We have come up with an action plan, prior to the product launch, slated to be release in January 2006 in Singapore.

Program Overview

November 2005:

Inform shops, outlets, e.g. at supermarkets, convenient stores, that a new beverage product will be launched in January, and it is under the brand Lipton.

Request for new product to be placed with the other existing Lipton products in outlets, for easy identification for customers.

Negotiate and discuss with distributors, to come up with an agreement on the new product.

December 2005:

Confirm the amount of the new product to be distributed and transported to each outlet.

Fix and confirm the date of transportation of the new product to the outlets.

1 week before product launch:

Advertise through television, radio, magazine, newspapers, in-station bulkheads, on taxi tops, the Internet and at health or Lipton’s website. These create awareness and generate interest in the new product.

Advertisements should emphasize on the well-known brand image, Lipton, and the new tea’s strengths, which are the diet and decaffeinated.

On the day and during the week of product launch:

Create excitement and curiosity among the public with the new product, by including a packet sample with every copy of a popular magazine, like 8 days and Health Today.

A free sample given with a copy of popular local newspapers, such as The Straits Times or The New Paper.

Budget

Market Expenses Budget

2006

2007

Advertising & promotions

$373,320

$323,280

Transportation (freight costs & distributors)

$24,840

$19,200

Administrative expenses

$110,160

$78,680

Labor (salaries)

$80,160

$56,556

Others

$4,852

$4,112

Total expenses

$593,332

$481,828

Since the new product is to be released in January 2006 here, budgets must be planned in advance to ensure that overspending does not occur. Total expenses budgeted for year 2006 is much more than in 2007, as more money is needed for creating awareness and distribution of the new product.

Income statement (Consolidated Profit & Loss) Account)

2005

2004

Total sales revenue

$5,023,440

$4,355,760

Cost of goods sold

$1,461,120

$1,253,640

Gross profit

$3,562,320

$3102,120

Less-Operating expenses:

Advertising & Promotions

$373,320

$323,280

Transportation expenses (freight costs & distributions)

$24,840

$19,200

Administrative expenses

$110,160

$78,680

Labour (salaries)

$80,160

$56,556

Others

$4,852

$4,112

$593,332

$481,828

Operating net profits/losses

$2,968,998

$2,620,292

The budgeted profits for year 2006 and 2007 are shown above. After deducting all expenses from sales revenue, the amount is the profits we will get in that year.

With strong advertising and promotions through media channels, awareness for the new product will be created. And since Lipton is a brand, which the public familiarized and trust, more people and existing customers might buy the new product to try. Therefore, the budgeted profit for the year 2006 is much more than year 2007.

Monitor and Control

Marketing controls that we will use to monitor the new product’s progress and allow management to review implementation results, and to take corrective action.

8.1. Operating control

Evaluation of the sales will be done once every two months after the launch, to check on the sales revenue.

Check ongoing performance against the annual plan and taking corrective action when necessary, so as to ensure that the company achieves the sales, profits and other goals set out in its annual plan.

Auditors will check thoroughly on the accounts that have been done, once every four months.

Online feedback section provided for existing and new customers about the new product. It also helps to keep the company updated on its progression.

8.2. Strategic control

Looks at whether the company’s basic strategies are well matched to its opportunities.

We should periodically reassess its overall approach to the marketplace, by using a marketing audit. It examines the company’s environment, objectives, strategies, and activities to determine problem areas and opportunities, and to recommend a plan of action to improve the company’s marketing performance.

It is normally conducted by an objective and experienced outside party.

We may also use marketing effectiveness rating instrument and marketing excellence review.

8.3. Efficiency control

Evaluates and improves the spending efficiency and impact of marketing expenditures.

It pertains to the efficiency of the marketing department with respect to the sales force, advertising, sales promotion and distribution channels.

Conclusion

In conclusion, this strategic marketing plan has provided all the information such as various opportunities and threats, which the company might face when the product is launched. By measuring the costs and benefits, we believe that this plan will be successful when we implement measurable action plans and budget control.

We also believe that this product will be among the best selling beverage items in Singapore, as now the people are more health focused.

Lipton has its own tea estates and tea research facilities, employing over 80,000 people. It maximizes consumer and customer understanding, by giving the tea tasters extensive training through frequent travels to tea growing areas throughout the world to gain knowledge in the harvesting, production, procurement, blending and tasting of more than 3,000 types of tea. In addition, it sources tea from as many as 25-35 different countries, to ensure consistent taste and quality.

Corporate Milestone

In 1890, Sir Thomas Lipton founded Lipton whom was considered the father of modern advertising.

In 1893, Sir Thomas Lipton established the Thomas J Lipton Co., a tea packaging company with its headquarters and factory in Hoboken, New Jersey

By 1898, Lipton had shops all over Britain.

In 1915, the present name of the company was adopted, and it was incorporated in with Sir Thomas Lipton as the president.

Now, Lipton is owned by Unilever, which has committed to quality for over 105 years.

Today, Lipton is the world’s leading tea brand and present in more than 120 countries, and is also one of the few companies that employ¬†expert tea tasters.

Company’s Mission

Bring our wealth of tea knowledge and international tea expertise to customers throughout the world and continuously seek new and improved ways to deliver the best tea experience for our consumers.

Goal

To meet the everyday needs of healthy tea everywhere.

Objectives

The company’s objectives are sustaining profitable growth, creating long-term value for the shareholders, people, and business partners, commitment to performance and productivity, working together effectively, and a willingness to embrace new ideas and to learn continuously.

Situational Analysis

Market Analysis

Market Size and Trend

2003

2004

Health Conscious

47%

67%

Non Health Conscious

53%

33%

Source: http://www.hpb.gov.sg/hpb/default.asp?pg_id=1441

Studies have shown that the number of “health conscious” people has grown rapidly within Singapore in the past two years and the number is still growing.

Therefore, there is a high potential market for the diet decaffeinated tea as caffeine can cause increased heartbeat, respiration, basal metabolic rate, gastro enteric reflexes, and the production of stomach acid and urine increases the risk of developing chronic diseases such as certain cancers and heart disease.

Nowadays, the trend is to keep fit and healthy, especially for women who want to keep slim. So the diet and decaffed tea will be in hot demand.

Market Competitors

The market competitors of Lipton Singapore are Waitrose Originals, Twining, BOH tea, Gold Kili and Nestea. Although these competitors offer a similar range of tea product as Lipton, but currently, there is no such tea product in the market that has Lipton DD Mix. For now, they are unable to match Lipton’s advantage with this new value-added product. But in the foreseeable future, these competitors might possibily copy the new product after its launch, and sell it at a much lower price.

Company Analysis

Lipton has been in the industry for more than 100 years. Besides being the market leader in the tea industry, it also has a good brand image and reputation, thus ensuring a certain degree of customer loyalty among the consumers.

Product Analysis

Lipton product ranges from black to green tea filled with different flavours, to different healthy tea like diet and decaffeinated. It adapts different ways of packaging in presenting teas to consumers for different target markets (i.e. tea bags, bottled tea and tea mix).

Lipton Diet Decaffeinated Lemon Iced Tea Mix (Lipton DD Mix) is a bottled powdered drink that enables consumers to mix up to 40 cups of Iced Tea. It is also available in a dozen convenient packets in a box.

Target Consumer Analysis

Lipton DD Mix caters to the health conscious people who are among the young and the adults. Some of consumers may have health issues such as high cholesterol, allergic to caffeine and have diabetes can consume this diet and decaffeinated tea.

It also caters to those concerned about their diet, and the food or beverage they consume, to benefit their health.

S.W.O.T

The company’s marketing environment is made up of various sectors and forces within the organization. The following shows the various strengths, weaknesses, opportunities and threats of Lipton.

Strength

Lipton is the only company that has tea, which is both diet and decaffeinated. It may take competitors some time to produce this range of product. This product line extension has some important benefits:

Firstly, the same sales force can often be used to sell the new products and hence, increase sales efficiency (i.e. sales per salesperson)

Manufacturing capacity can be better utilized and lower the allocated manufacturing overhead for all brands

Greater advertising efficiency when product line extensions are built off an existing brand name which is known for its quality

Faster acceptance of core brand extensions because the flanker brand is associated with a well-known brand.

Weaknesses

Lipton already has a wide range of products. The public may not necessarily accept this new product or the market volume might not be big enough. Furthermore, it might cannibalize Lipton’s other products.

Opportunities

With this new product, Lipton can further cover another segment of the tea market and reinforce its leader position in the industry. Currently, there are no such teas available. It will also portray Lipton as an innovator and trendsetter.

Threats

There are plenty of teas from other brands offered to consumers such as Chailatta Tea, Black Tea, Chinese Tea, Ginseng Tea, Organic Tea, and Herbal Tea. Slimming teas have also become more popular among the young adults. With more and more substitute beverage drinks available in the market, competitors compete with one another for more market shares.

Target Market

With the increasing expectation and demands of consumers, the challenge of companies in today’s tea industry is to offer consumers a better product

Market Segmentation

Market segmentation is the process of identifying a specific set of characteristics that differentiate one group of consumers from the rest.

The market for tea can be easily segmented on the basis of taste and price. Some individuals prefer the highest grade of loose-leaf tea because of its taste, while others who cannot tell the difference in quality would buy primarily based on the price, brand image and availability.

Lipton uses a few main bases for segmenting the tea market in Singapore, namely, demographic, psychographic and behavioral segmentation.

Demographic segmentation

Demographic segmentation divided the market into groups based on variables such as age, gender, income and education.

Age, Gender & Income:

The total population in Singapore is approximately 4,2403,000. 45.8% of the Singapore labor force is female and the rest are males. With growing household income, there is an increase in buying power. With a healthy lifestyle becoming a trend in Singapore, more people will buy and try this new product, to feel good and to keep fit.

Education:

Among those with secondary or tertiary education, there is awareness on the preferred and healthier choice of beverages they consume. These consumers gain their knowledge on “diet tea or decaffeinated tea” through books, Internet and magazines articles, etc. And they are willing to pay a premium price for this tea.

Psychographics segmentation

Psychographics segmentation divided the buyers into different groups based on social class and lifestyle.

Social Class, Lifestyle:

Through the government publicity campaigns, it has encouraged people to lead a healthy life style. Hence, tea is one of the choices for healthy beverage.

For the young adults, they have discovered the pleasure of sipping a variety of black and green teas, and tea is not only a fresh, hip beverage, but a healthy one too. Women between the ages of 30 to 50 are still the main tea-drinking consumers, who usually drink it during leisure-time breaks and in social outlets. Among the men, who comprises of an increasing segment that is seeking the enjoyment of tea. They gain their awareness of the benefits of tea drinking through press reports. Most of them consume tea for health reasons, as well as to relieve stress.

Our new Lipton DD Mix will be the most preferred among others teas, as it has diet (low calories count), decaffeinated (caffeine free), natural lemon flavor (vitamin C), more value for money as it has three in one in just a cup of tea.

Behavioral segmentation

Behavioral segmentation divides buyers into groups based on their knowledge, attitudes, uses, or response to a product, based on occasion, benefits and loyalty status.

Occasion:

Buyers can be grouped according to occasions when they get the idea to buy, actually make their purchase, or use the purchase item.

Tea is most often consume at breakfast, but Lipton tea growers have promoted drinking tea as a cool and refreshing drink that can also be consume at anytime of the day.

Benefits:

Lipton tea naturally contains flavonoid antioxidants that protect the body against free radicals. It helps to maintain a healthy cardiovascular system. Our new tea also contains vitamins, low calories count (aids to promote healthy functioning of the stomach and intestines), and no caffeine.

Loyalty status:

Lipton Tea offers a strong portfolio of brand. Today, most people associate Lipton with tea because of the ultimate power of a brand; that is both modern and rich in heritage.

Target Marketing

A target market consists of a set of buyers who share common needs or characteristics that the company decides to serve.

Differentiated Marketing:

Hot or cold, ready-to-drink, powdered or bagged, black or green, tea is one of the healthiest beverages on earth, and as such is becoming increasingly relevant to the growing number of consumers leading a healthy lifestyle. With the new launch of Lipton DD Mix, it caters to those who want to enjoy a cup of tea without spending much and feels slim and healthy at the same time.

Market Positioning

Positioning is to arrange a product to occupy a clear, distinctive and desirable place relative to competing products in the minds of the target consumers. The competitive position adopted should be based on matching product attributes to customer needs.

Due to the pressure of a fast paced lifestyle, many Singaporeans do not watch what they consume and that result in health issues. Studies have shown that 16.2% of the young and the adult Singaporeans are obese and this is the second largest health problem Singapore faced.

Therefore, Lipton DD Mix will be the most preferred among other beverages, as this tea is the first in Singapore that has 3 in1 benefits (diet, decaffeinated and lemon taste) when consumed. It aims to target on the differentiated market of today’s health conscious consumers of the young and the adult.

Marketing Mix

The goal of a market positioning strategy is to create a product-price position that is attractive to target customers. However, a highly integrated product-price positioning strategy will also require an effective place-promotion marketing effort which will help the company build a successfully target market positioning strategy.

Marketing decisions generally fall into the four controllable categories (4Ps): Product, Price, Place (distribution) and Promotion.

Product (Characteristics)

Lipton DD Mix is a fast moving consumer good.

A sugar-free drink that can quench thirst in an instant, contain protective antioxidants and it is a great tasting way to get necessary daily fluid intake.

A pioneer product in Singapore with the hope of capturing the health conscious tea drinkers.

A product under the world’s tea leading brand-Lipton.

Price (Premium Pricing)

The perceived quality and value of a product is usually indicated by the price

Adopting a premium price policy while still delivering superior customer service until competition can match its source of competitive advantage (i.e. product differentiation). During this “monopoly” period, this premium pricing is sustainable because competition cannot match Lipton’s relative advantage. Lipton should pursue production cost (per unit) reduction and be in strong position to compete at a lower price level when competition matches their source of advantage.

Providing allowances for launching and future sales promotion without sacrificing too much profit.

To ensure a meaningful profit for retailers, wholesalers and company.

Place (distribution)

Distribution is about getting products to customers.

Penetration of existing or new channels: to appoint or recruit wholesalers and retailers to distribute this new product to customers in Singapore.

Order processing: to set an efficient and effective way for distributors to order the product as needed.

Improvement of organizational transportation and logistics system to support distributors for launching the new product, and to better achieve distribution objectives.

Promotion

Promotion represents the various aspects of marketing communication, that is, the communication of information about the product with the goal of generating a positive customer response. To generate a high degree of awareness of the product, it is extremely crucial to communicate to the targeted audience. The benefits derived from using the product must be made known to targeted consumers by:

Advertising- by means of TV media, Radio, Newspaper, Magazines and Posters

Sales promotion- carried out attractive promotions when first launching the product to draw as many customers as possible.

Sponsorship- in entertainment activities to strengthen the company’s public image and reputation.

Marketing objectives

Product:

For the total market share, the objective is to achieve 15% by the end of the first year of product launch.

Price (Premium Pricing)

Selling price: S$11.50 per bottle (40 servings), S$4.50 per box (12 packets) and $1.80 per bottle “Ready-To-Drink” (500ml). This pricing has considered some factors like: Waitrose Original Blend Decaffeinated Tea (relative bigger size-80 bags), a close competitor, is priced at S$10.95 and Lipton Green Tea (similar size-50 bags) is priced at S$6.50 in the market.

At the beginning of product launch, we can offer attractive discounts in the short-term to persuade consumers to buy (lowering the “Risk” for consumers)

Place (distribution): Extensive distribution

The main launch is to achieve 80% coverage of supermarkets and convenience stores in Singapore.

Promotion:

The objective of promotional programs is to create an unforgettable impression of the product in the minds of our targeted consumers.

Awareness- through our intensive promotional program, we aim to achieve an awareness of 80% by the end of the first year of product launch.

Marketing strategies

Lipton DD Mix is a new product in the Singapore market. We intend to adopt a Rapid-Penetration Strategy to launch the new product at a low price (offering attractive discounts to lower the price temporarily) and spending heavily on promotion. Heavy promotion will boost the product’s image as well as convincing consumers to buy the product. This strategy can bring about the fastest market penetration and the largest market share.

Product

Product class- a relative high-class product for those who know its value of quality.

Branding- a meaningful brand name “Lipton” reflects on the high life standard among the public.

Packaging- an attractive packaging brings a perception of brightness, vitality and fun with natural goodness to enhance consumers’ preference for the product.

Price

We intend to implement a “Price leadership” strategy for Lipton DD Mix. This pricing strategy offers the following advantages:

To reinforce its leader status in Singapore

Adopt a premium pricing to reinforce its “uniqueness” and “premium image”

Offer attractive trade discounts to wholesalers or distributors and ensure higher profit margin (relative to other brands or products) for them. Get their “buy-in” and “entice” them to push sales

Place (distribution)

Market coverage strategy uses selective distribution from existing or new channels for launching this new product because of the relative high selling price. For example, those supermarkets like NTUC, Cold storage, Carrefour and convenience stores like 7-eleven, Cheers, which possess strong potential to sell the product well, are selected.

Offer higher discounts to distributors to encourage them to carry the new product for resale.

Promotion

Promotion consists of both advertising, sales promotion, and public relations. Advertising offers reasons to buy a product; sales promotion offers reason to buy it now. Sales promotion consists of short-term incentives to encourage purchase or sale of a product. No matter how good a product is, consumers still require some form of persuasion in order to convince them that they actually need the product. Our promotional strategies involve the use of the following vehicles:

Advertisement: “high reach” strategy

Advertising is the use of paid media by seller to inform, persuade and remind consumers about its products or organization. Examples of advertising medias include: TV, Newspaper, Radio, Health Magazines, Computer related Magazines, Outdoor transportation such as on public bus, MRT and taxis, etc. With a strong core brand name (i.e. Lipton) and a well-established distribution network, Lipton can consider using mass media like TV, Newspaper and Radio to advertise about its new product offering. The frequency of advertising in TV, Radio and Newspaper must be intensive especially for the first 6 months of product launching to create an excitement in the market. This intensity will be gradually reduced but the continuity must be maintained to carry on the reminding effect.

Sales promotion

Occasional sales promotion is critical, as it is useful for new product launching, it will be conducted to draw customers as well as to generate high sales volume. To avoid dampening the brand image, offer a reasonable discount for the first several months of launching the product to attract consumers, instead of lowering the price for a long-term. A Purchase-With-Gift method is also recommended (e.g. giving out a free bottle mixer with every package of Lipton DD Mix purchased).

Personal selling

To station sales promoters at all selected supermarkets in order to create a “push” effect and to invite valuable feedback from the consumers at the beginning of product launching.

Public relations

Public relations: Build good relations with the company’s various publics by obtaining favorable publicity, building up a good corporate image, etc. Occasional sponsorship of entertainment programs (i.e. health seminars) will help the company to boost its reputation and relationship with the public. This in turn will give the organization a good public image. This strategy will help to reinforce consumers’ mind-set (Lipton product is very good) and convince them to buy the product for instance, sponsoring the annual National Healthy Lifestyle campaign held once every year.

Action plan and Implementation

Implementation (action plan):

We have come up with an action plan, prior to the product launch, slated to be release in January 2006 in Singapore.

Program Overview

November 2005:

Inform shops, outlets, e.g. at supermarkets, convenient stores, that a new beverage product will be launched in January, and it is under the brand Lipton.

Request for new product to be placed with the other existing Lipton products in outlets, for easy identification for customers.

Negotiate and discuss with distributors, to come up with an agreement on the new product.

December 2005:

Confirm the amount of the new product to be distributed and transported to each outlet.

Fix and confirm the date of transportation of the new product to the outlets.

1 week before product launch:

Advertise through television, radio, magazine, newspapers, in-station bulkheads, on taxi tops, the Internet and at health or Lipton’s website. These create awareness and generate interest in the new product.

Advertisements should emphasize on the well-known brand image, Lipton, and the new tea’s strengths, which are the diet and decaffeinated.

On the day and during the week of product launch:

Create excitement and curiosity among the public with the new product, by including a packet sample with every copy of a popular magazine, like 8 days and Health Today.

A free sample given with a copy of popular local newspapers, such as The Straits Times or The New Paper.

Budget

Market Expenses Budget

2006

2007

Advertising & promotions

$373,320

$323,280

Transportation (freight costs & distributors)

$24,840

$19,200

Administrative expenses

$110,160

$78,680

Labor (salaries)

$80,160

$56,556

Others

$4,852

$4,112

Total expenses

$593,332

$481,828

Since the new product is to be released in January 2006 here, budgets must be planned in advance to ensure that overspending does not occur. Total expenses budgeted for year 2006 is much more than in 2007, as more money is needed for creating awareness and distribution of the new product.

Income statement (Consolidated Profit & Loss) Account)

2005

2004

Total sales revenue

$5,023,440

$4,355,760

Cost of goods sold

$1,461,120

$1,253,640

Gross profit

$3,562,320

$3102,120

Less-Operating expenses:

Advertising & Promotions

$373,320

$323,280

Transportation expenses (freight costs & distributions)

$24,840

$19,200

Administrative expenses

$110,160

$78,680

Labour (salaries)

$80,160

$56,556

Others

$4,852

$4,112

$593,332

$481,828

Operating net profits/losses

$2,968,998

$2,620,292

The budgeted profits for year 2006 and 2007 are shown above. After deducting all expenses from sales revenue, the amount is the profits we will get in that year.

With strong advertising and promotions through media channels, awareness for the new product will be created. And since Lipton is a brand, which the public familiarized and trust, more people and existing customers might buy the new product to try. Therefore, the budgeted profit for the year 2006 is much more than year 2007.

Monitor and Control

Marketing controls that we will use to monitor the new product’s progress and allow management to review implementation results, and to take corrective action.

8.1. Operating control

Evaluation of the sales will be done once every two months after the launch, to check on the sales revenue.

Check ongoing performance against the annual plan and taking corrective action when necessary, so as to ensure that the company achieves the sales, profits and other goals set out in its annual plan.

Auditors will check thoroughly on the accounts that have been done, once every four months.

Online feedback section provided for existing and new customers about the new product. It also helps to keep the company updated on its progression.

8.2. Strategic control

Looks at whether the company’s basic strategies are well matched to its opportunities.

We should periodically reassess its overall approach to the marketplace, by using a marketing audit. It examines the company’s environment, objectives, strategies, and activities to determine problem areas and opportunities, and to recommend a plan of action to improve the company’s marketing performance.

It is normally conducted by an objective and experienced outside party.

We may also use marketing effectiveness rating instrument and marketing excellence review.

8.3. Efficiency control

Evaluates and improves the spending efficiency and impact of marketing expenditures.

It pertains to the efficiency of the marketing department with respect to the sales force, advertising, sales promotion and distribution channels.

Conclusion

In conclusion, this strategic marketing plan has provided all the information such as various opportunities and threats, which the company might face when the product is launched. By measuring the costs and benefits, we believe that this plan will be successful when we implement measurable action plans and budget control.

We also believe that this product will be among the best selling beverage items in Singapore, as now the people are more health focused.

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