Marketing for the Tea Brand Thé

Executive Summary

Consumers are frequently looking for new beverages to try and the creation of Thé will significantly impact the marketplace. The tea will encompass an assortment of flavors with the mission of ensuring that the leaves used are in accordance with Fair Trade standards. Consumer behavior still suggests that tea is one of the most beloved beverages worldwide and thus, Thé will make itself known to consumers on this premise. The main competition for the brand will be Lipton and Nestle, both well-established brands that consumers are familiar with. As a consequence of this, Thé marketing will be centered on a total of eight marketing objectives geared toward driving consumer loyalty within the first year. Assessments will be done on the basis of a performance analysis and SWOT to further understand the viability of a new tea beverage in the marketplace.

Environmental Analysis

Tea is considered one of the most consumed beverages in the world with the exception of water. According to The Food and Agriculture Organization of the United Nations, (2009) U.K. residents consume 2.74kg of tea per capita, Canadian residents 1.2kg and while in the United States, consumers use roughly .33kg or 12 ounces of tea per capita. There are differing estimates of total tea consumption based on how much tea is sold and imported, but the U.S. imported 217,221,887 kilograms of tea for domestic consumption in 2013 alone. The Tea Association of the USA Inc. (2013), states that tea "is the only beverage commonly served hot or iced, anytime, anywhere, for any occasion" (p.1). On a given day around 158 million Americans enjoying a cup of tea, according to the Tea Association of the USA.

As such, the product that will be discussed is iced tea, but not just iced tea: Thé (pronounced thae). Simply put, it is flavored iced tea. Given tea’s immense popularity as a tasty and health-promoting beverage both domestically and internationally, rationale suggests that introducing an iced tea that can and will compete with the likes of Lipton and Nestle will significantly impact the beverage landscape. Nestle and Lipton are considered inter-brand competitors because they offer similar products differentiated mostly by brand. Thé will face intra-brand competition as well by retailers who will compete to sell Thé’s beverages at different prices. Thé can compete with other major tea brands because “85% of tea consumed in America is iced" (Tea Association of the U.S.A. Inc., 2013). Thé will carve a niche in the American tea market by differentiating its product from competitors large and small. Thé will be centered on Fair Trade, health and inspiration. There is currently no tea in the marketplace that intertwines these ideas to appeal to the consumer. Thus, economics stipulates that having a brand of tea, iced in particular, that functions on the subjects of health and inspiration will have a profound effect in the consumer marketplace.

According to Fair Trade USA (2014) having fair trade assists workers and farmers in ensuring that their products are priced fairly and that their business and community at large are improved. Fair Trade is specifically designed to have an environmental and social as well as economic impact (Fair Trade USA, 2014). Therefore, having tea that is Fair Trade tea will serve two purposes: 1) it will be healthy tea because it is certified to utilize safe raw ingredients and 2) those who work on producing the tea (i.e. the workers and farmers) have the capability to make a decent minimum wage and subsequently improve their way of life and the environment around them. Thé will benefit tremendously because most companies remain silent on the issue of trade and do not use Fair Trade ingredients or if they do, do not openly disclose that they utilize tea that is Fair Trade. This holds true for the two large tea brands, Lipton and Nestea, that Thé will be in direct competition with. There is reason to believe that the forces at work on both a competitive, economic and sociocultural level will propel Thé to new heights to the point where Unilever/PepsiCo, which makes Lipton tea and Nestle, maker of Nestea will become concerned about Thé’s impact on their brands.

As far as motivation, Fernet (2013) asserts that there is a notable amount of alteration in terms of performance of individuals when motivation is at work. That motivation allows for a deeper understanding of the specific dimensions of an individual and in effect, individuals perform better in work and in life (Fernet, 2013). Thé will be a motivational tool in its marketing to consumers both on the physical label itself and in advertising.

Target Information

Thé is the French translation for tea, but tea has a universal cultural appeal. Due to this factor, Thé will be marketed to all individuals, but its main focus will be on individuals’ from 18-60 because of its health and motivation focus. A bottle of Thé will have a motivational saying printed on a green and white bottle. Its slogan will be a catchy jingle about starting one's day right with a bottle of Thé. Since the primary market for Thé will be 18-60, there will not be a particular emphasis on income level, even though that is often a slant that companies employ in their brand strategies. Tea is accessible to all income levels due to its convenient and inexpensive nature: but Thé is unique in the added value certain customers are seeking: namely inspiration, fair trade, and creative styling. The large consumption of tea in the domestic and international market justifies casting a wide net across different demographics in the search for new customers and in order to build the brand.

Initially, the flavors for Thé will run the gamut in order to begin the domination of the iced and powdered instant tea market while predominantly focusing on packaged ice tea. The primary flavors will be unsweetened black tea, sweetened black tea, lemon, raspberry, and peach. Additionally, there will be coconut, green, iced tea/lemonade mix, mango, papaya, pomegranate, sparkling and red or rooibos tea. With the success of these flavors, the company is in the planning stages for single-serve K-Cups, and the creation of additional including oolong, matcha, white, hibiscus flavored, tropical intensity (a combination of tropical flavors) and green rooibos (green-red combination). With the initial planning of Thé, it will be available in canisters, glass and plastic bottles. The additional brand expansion will include an e-commerce component to the website to allow consumers to purchase the products online and have them shipped to their home or office.

Marketing Objectives & Performance Analysis

At the onset of the emergence of Thé, there will be four distinct qualitative marketing objectives that will focus on improving: position, image, attitudes, and awareness. Each of these is important to the overall brand especially image as it dictates the quality, price, value and preference of the consumer. (Mullin, 2004) Position refers to the opinion the customer will have about the product. Awareness speaks to how well the consumer feels about the overall company's position in the marketplace. It is different from image in that consumers factor in the activities of the business. Attitudes refer to how the consumers feel about the product in relation to the competition (p.1). Since the message of Thé is social responsibility, there is an assertion to be made that their activities will be centered on environmental sustainability and educating the general public on why it is essential to operate on a socially conscious level. The emphasis placed on “marketing ethics and social responsibility has grown in recent years, and their role in the marketing plan process has become even more important as many firms have seen their images, reputations, and marketing efforts destroyed by problems in these areas.” (Ferrel & Hartline, 2011) Thé will profess a lifestyle mantra of global and personal health and motivation. In other words, drinking a glass of Thé will inspire a feeling of positivity in the individual drinking it not only because of the health benefits of tea drinking but because of the motivational sayings printed on the bottles and canisters used.

Because companies and businesses must assess their performance on the basis of data, there is a need for quantitative objectives which for Thé will include a social media plan being developed to track what consumers are saying, posting, and tweeting about the products; an assurance of consumer satisfaction and happiness by examining what flavors are generating more positive feedback than others and how well the messaging is being received; increased sales, which denote whether or not goals are being reached consistently and finally; a market share expansion, which allows for relevancy and growth in the long-term (Guettler, 2014). Thé will carve a niche into the beverage market with its unique combination of flavor and attitude, and quantitative data such as the number of tweets and likes and hard sales data will reflect this market share. In essence, the quantitative objectives of marketing ask the proverbial question - is the product viable? Can Thé withstand the weight of the beverage behemoths pitted against it and loosen their foothold in the consumer marketplace? To analyze the profound effect Thé will have on the market, the following is a performance analysis graph of execution for marketing objectives over a period of 10 years.

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At the conclusion of 1 year of operations, management will assess the viability of the brand and decide whether certain flavors need to be nixed or not; and whether the marketing strategy needs to be tailored and/or tweaked according to customer needs in order to obtain the necessary growth and expansion of the overall company. Information will be pulled by Thé’s market analysts using consumer surveys and social media data mining to determine which market segment is enjoying the brand the most and additional data will be drawn to evaluate the ideal offering of flavors. In doing this, management will examine the effectiveness of the different flavor profiles in terms of advertising dollars and budgeting purposes.

SWOT Analysis

A SWOT Analysis will be conducted comparing the strengths, weaknesses, opportunities, and threats of Thé to that of Lipton Iced Tea and Nestea. While Thé will be available in powder form, iced tea is its main focus and the crux of the operation. Thus, the analysis will be performed on iced tea only for the purposes of this marketing plan.

(Table omitted for preview. Available via download)

It seems that Thé has a fighting chance in the iced tea arena given the weaknesses associated with its potential competitors, especially in the eyes of consumers. While other smaller brands have their respective customers, the main competitors or “big dogs” who compete against all up and coming tea brands are Lipton and Nestle. The largest factor in outsmarting these companies will be to find a way to solve the moisture/storage issue that the competition currently faces and differentiate Thé bottled ice tea from other brands with a hip, socially conscious marketing strategy. This eco-friendly and socially conscious trend is the most significant trend that will impact Thé’s potential success. If Thé is able to capitalize upon these factors through effective interactive marketing strategies including a presence on Twitter and Instagram, where they can connect to the youthful portion of the target demographic, they will be a force to be reckoned with.

Positioning Statement & Analysis

Thé is the optimum iced tea beverage for inspiration. It is the driving force behind superb health with a delightful and satisfying taste. This particular positioning statement will be the focus of the brand from inception. Each advertisement or marketing initiative will be positioned with this statement in mind. Consumer behavior suggests that individuals are seeking new and unique beverages to try. Thé has an excellent chance at capitalizing on current market trends and becoming a well-known brand on par with major competitors, demonstrating both longevity and loyalty among the current and future consumers.

Mission Statement

Thé unites workers, customers, and the environment by sourcing only the highest quality fair trade teas, concocting delicious beverages by mixing our teas with unique all-natural flavors and encouraging consumers to find inspiration in their daily life through the motivational slogans and images printed on our bottles. Our mission is to bring a new and unique iced tea beverage the likes of which the tea-drinking world has never seen before.

Implementation Strategy

Thé will follow an optimal and streamlined implementation strategy which begins soliciting potential consumer data immediately and focuses chiefly on bringing in capital through investors, creating relationships with vendors, and finally, marketing and shipping a high-quality product to consumers.

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Begin obtaining funding\startup capital (1 year before opening and ongoing)

Design packaging and promotional materials (6 months before opening and ongoing)

Obtain proper licensure (6 months before opening)

Find real estate e.g. offices and contract bottling plant\distribution center (6 months before opening)

Create and maintain customer and vendor accounts e.g. Quickbooks (1 month before opening and ongoing)

Hiring and managing staff (3 months before opening and ongoing)

Source and purchase supplies and inventory ongoing initial purchases (3 months before opening)

Market the product to retailers and consumers (1-year preparation, ongoing after opening)

Branding

As discussed, Thé aims to strike a balance between accessibility and luxury, serving customer’s exquisite tastes while remaining a positive influence in the world and an inspiration to tea drinkers. The brand will have a consistent message which is reinforced through integrated marketing techniques including social media. That message is sustainability, flavor, and pure enjoyment. The mission and positioning statements cultivate a positive atmosphere that further emphasizes the brand. Thé sets itself apart from others by emphasizing Fair Trade and environmental impact without ignoring taste, thus meeting the needs of a wide swath of consumers. Creating those needs in potential customers by utilizing clever marketing including promotions, endorsements, and online presence is going to be a main strategic goal for Thé before products even hit the shelves. Viral marketing and word of mouth are a proper medium to spread a brand which is all about empowering individuals.

Pricing

The product will be priced appropriately for the beverage sector and competitively with competitors’ teas when sold as singles. The ideal price point is between $.99 cents and $3.99. There is a difference between “’cold’ (as in, is not growing and profiting significantly)” and “hot” prices of “1.50 to 2.00 or even higher.” (Olson, 2009). Thé is positioning itself as a new-age beverage which provides added benefits over boring teas, and under unhealthier beverages. 2 liters of Lipton Iced Tea lemon costs around $1.50. However, Thé is not needlessly watery and sugary and is packaged efficiently, thereby demanding a higher price for a lower volume of drink and breaking out of the $.99 price point. By positioning itself as a new-age beverage, Thé catapults its value compared to traditional tea drinks.

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This is a packaging, branding and pricing mockup to show investors. It could also be modified for use as advertising: becoming part of the integrating marketing plan.

Distribution

According to Olson (2009), distribution can be one of the costliest and difficult parts of starting a new beverage business. Experienced beverage distributors often demand runs of 10,000 bottles at a time, and this can eat up starting capital before a product even ships. (Olson, 2009).

Five Year Plan

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Performance Standards

As a part of the overall marketing strategy for Thé, two specific performance standards will be used to assess progress and “reduce discrepancies between desired and actual performance.” (Ferrell, 2011) The first performance standard will be a 5% or greater quarterly growth in sales volume over the first 5 years. The second performance standard will be based on our interactive marketing component: namely, the percentage of brand name recognition and recall ability based on surveys of current and potential customers. The standard will be that 25% of current customers will state that they identify with the brand and 10% of randomly surveyed consumers would be interested in trying the brand, with a 1% quarterly growth in these categories during the first five years. Additional resources to suggest performance improvements can be found by data-mining social media and conducting additional research and development.

Monitory Methods

Performance, effectiveness, and efficiency will be measured by monitoring customer feedback via our presence on Twitter and Instagram. This provides Thé with a direct line to consumers and allows quick action to remedy complaints, concerns, and desires. When people are tweeting about how much they love #thécoconut and #thétaste, those data points can be measured and evaluated to determine trends and consumer needs. Performance will also be monitored in a more traditional sense, by examining profit-loss reports and budgets for hard numbers regarding cash flow and costs.

Financial Controls

“The two biggest problems which managers face when developing controls for their organizations are 1. Determination of appropriate performance areas or control units and 2. Determination of what constitutes a satisfactory level of performance (“What ought to be”) within each area or unit.” (Brewer, 2014) Additionally, “the expenses that young companies incur to generate future growth are often mixed in with the expenses associated with generating current revenues.” In brand-new companies such as Thé, it “is not unusual to see the Selling, General and Administrative (S,G&A) expenses…be three or four times larger than revenues, largely because they include the expenses associated with lining up future customers.” (Damodaran, 2009)

There is a two-pronged approach to implementing financial controls: first, keep a budget that looks forward to the future by including estimated and actual income, losses, and profits. Secondly, take stock of the company’s marketing strategy in terms of dollars spent and new customers acquired. After one year, it will be easy to see whether Thé’s interactive marketing strategy is paying off by looking at sales and crunching social media figures.

Overall Potential Performance

Thé has tremendous potential for future performance. The tea juggernauts of Lipton and Nestea move too slowly and lack the socially conscious message that Thé brings to the table. There is ample potential for growth over the next 5 years in the bottled iced tea sector because of the high levels of U.S. iced tea consumption and the dearth of hip, environmentally sound beverages. In terms of hard numbers, Thé is expected to experience rapid revenue growth approaching 33% year over year growth for the first 5 years as consumers are encouraged to try Thé for themselves and learn what differentiates Thé from other iced teas on the market.

Integrated Marketing Communications

In order to ensure that brand message is consistent across different mediums, Thé will utilize an integrated marketing communications approach that strikes on all fronts: search, social media, and mobile. There are millions of potential customers checking their Twitter and Instagram accounts, often from a mobile device, who are curious about new products including beverages. Thé intends to reach these customers through a multi-platform approach that begins with social media promotions and ends with Thé as an e-commerce entity in and of itself which propagates information about health, inspiration, and the benefits of choosing Thé over other beverages.

References

Brewer, T. (2014). Standard of performance and business success. Agribusiness management. Washington State University. Retrieved February 28, 2014, from http://www.agribusiness-mgmt.wsu.edu/ExtensionNewsletters/performance/Standards.pdf

Damodaran, A. (2009). Valuing young, start-up and growth Companies: estimation issues

and valuation challenges. New York University. Retrieved from http://people.stern.nyu.edu/adamodar/pdfiles/papers/younggrowth.pdf

Fair Trade USA. (2014). Retrieved from http://fairtradeusa.org

Ferrel, O. C., & Hartline, M. D. (2011). Marketing strategy (5th ed.). Mason, OH: South-Western CENGAGE Learning.

Fernet, C. (2013). The Role of Work Motivation in Psychological Health. Canadian Psychology, 54(1), 72-73. doi:10.1037/a0031058

Guettler, A. (2014). Examples of Quantitative Marketing Objectives. The Houston Chronicle. Retrieved from http://smallbusiness.chron.com/examples-quantitative-marketing-objectives-21357.html

Mullin, S. (2014). Examples of Qualitative Marketing Objectives. The Houston Chronicle. Retrieved from http://smallbusiness.chron.com/examples-qualitative-marketing-objectives-21297.html

Olson, J. S., & López, C. (2009). Build your beverage empire: develop, market and sell your beverages. S.l.: Cube17, Inc.

Tea Fact Sheet – 2013. (2013). Retrieved from Tea Association of the U.S.A. Inc., Retrieved February 28, 2014 from http://www.teausa.com/14655/tea-fact-sheet

United Nations Food and Agriculture Organization. (2009). Tea consumption per capita. Retrieved February 28, 2014 from http://faostat.fao.org/default.aspx‎