Category: Tea

Introduction

Market differentiation remains as one of the most reliable ways through which businesses gain market share leadership and outwit their competitors. Sustainability programmes and plans play a critical role in ensuring that brands regain and maintain their market positions against competition onslaught.

One company that has applied sustainability programme in its efforts to maintain its market leadership position is Unilever Plc. A world’s top consumer goods manufacturer, ranging from home care merchandise, food products, to personal care goods, Unilever introduced a ‘Sustainable Living Plan’ that intended to achieve a number of strategic goals.

Firstly, it targeted improving consumers’ well-being and health, limiting the environmental impacts of its activities, as well as sustainably sourcing its entire agricultural raw materials by the year 2020. One area of focus that was of particular interest to the company was its tea product line.

Although it registered positive results in some international markets, the sustainable tea program encountered challenges in other markets. This paper seeks to discuss in detail Unilever’s ‘Sustainable Living Plan’, putting more emphasis on its sustainable tea program.

Unilever global tea market

Unilever sells its processed tea in more than 180 countries worldwide. The tea is sold under different brand names, with Lipton Tea being the company’s largest brand. The brand records an annual sales figure of about €3.5 billion, making it the world’s leading tea brand in terms of sales. Other additional brand names through which the company markets its tea include Lyons in Ireland and PG tips, mainly for the United Kingdom market.

India, Pakistan, Poland, and Russia also form part of Unilever’s extended international tea market. Lipton’s closest competitor in the global tea market is Tetley Tea, manufactured and marketed by Tata Beverages. However, the global market share enjoyed by Lipton is three times that of Tetley (Henderson & Nellemann 2011, p. 3).

Unilever sold about 350,000 tons of its processed tea in the year 2010. The tea was mainly sourced from external suppliers whose contribution was in the tune of 90%. The suppliers comprise of independent farmers and small-scale traders.

The remainder was obtained from company owned estates located in the East African regions, including its Kericho flagship estate in Kenya and another in Tanzania. In general, the global market is unique in terms of their preferred tastes. This makes specific international markets only reliant on supply sourced from particular countries.

The sustainable tea plan and its constructs

Established good practice guidelines in agriculture were first introduced in Unilever in 1998. These guidelines mainly focused on sustainable farming practices and targeted major crops processed by the company, such as tea, tomatoes, and palm oil. External suppliers were expected to meet specific standards before the company could purchase their produce.

The sustainability geared towards 10 important indicators that touched on the environment, society, and the economy. These included social and environmental management system, ecosystem conservation, wildlife protection, as well as water conservation, and fair treatment and improved conditions of working for the workers.

Other principles included occupational health and safety, community relations, integrated crop management, and soil management and conservation. To emphasize further on the importance of sustainable agriculture practices, the plan also incorporated integrated waste management. Unilever did not impose these practices on its suppliers, but rather opted to share with them, as well as with the public.

According to Michiel Leijnse, Unilever’s global brand director, the sustainable tea plan had its intentions on transforming the industry. There was the looming danger of the company failing to get the right quantity and quality of the tea that they required (Henderson & Nellemann 2011, p. 5).

Certification – The Rainforest Alliance

As part of the plans on sustainability, Unilever involved the Rainforest Alliance as its partner in the programme. The latter is the Sustainable Agriculture Network (SAN) founding member. In particular, the Rainforest Alliance’s partnership was sought because it was inclined towards market-based premiums as the prefect way of creating change.

Additionally, the Rainforest’s record of accomplishment was good, having won consumer recognition from past campaigns. However, the fact that the company had neither had previous experience dealing with tea nor the African continent was of critical concern for Unilever. Africa is where Unilever has one of its most successful tea estates throughout the world.

The certification process required that the whole production area meet the standards. Obtaining and maintaining of the certification required farms to meet at least 50% of each principle’s applicable criteria. Additionally, the farms were expected to meet a minimum of 80% of the entire set of applicable criterion.

Certification costs for independent farmers ranged between €3,000 and €4,500 depending on the size of the farm. Unilever chose to buy certified tea at a cost by paying a premium price. It also paid a participation fee to Rainforest Alliance to bear the frog logo of the certifying company on its pack. The rollout of the global certification education cost about €200,000 annually as Unilever assigned people to develop and deploy farmer training.

This was in combination with the certifying company Rainforest Alliance. Because certification of tea had never been witnessed before, meeting the targets that Unilever and Rainforest Alliance had set for the year 2010 was challenging. The company owned tea estates in Kenya and Tanzania became viable options if targeted results were to be met.

Equally, the large-scale tea suppliers became the target for initial certification plans. For the long-term plans, Unilever had to set focus in working with the entire supply chain, including the smaller and less organized ones. The challenge, however, lay in the fact that these kinds of suppliers spread across different countries, have their own agricultural practices, and receive varying government support.

The pioneer certification process

Unilever owns a 13,000-hectare tea estate in Kenya’s Kericho area. This area of land has been under tea plantation since 1928. The certification process began by leaving tea bush pruning to rot on the field instead of having them removed for other secondary use as cattle food or firewood. This practice maximized the soil fertility and helped in retaining water.

The use of fertilizer was carefully managed, bearing in mind its potential threat to the quality of soil. Drying of the tea was done using wood obtained from eucalyptus forests plant grown on the perimeter fence of the estate. Use of pesticides and agrochemicals on the Kericho tea estates was minimized mainly because of the area’s favourable climate.

Natural predators also inhabit the land surrounding the estate, making the use of pesticides not necessarily on a large scale. Unilever shifted focus on the well-being and general health of its 16,000 members of staff and their dependants. The workers’ earnings more than doubled compared to their earlier fixed sum compensation on every kilogramme of tealeaves picked.

The workers had free access to company health care and housing, in addition to free education for the workers’ children at Unilever owned schools. The estate achieved high yields because of the application of the sustainable tea production programme, with each hectare of land producing between 3.5 and 4 tons.

Compared to India’s production of between 2 to 3 tons an hectare, the case of Kericho’s estates was far much better. Estates in Tanzania equally applied the same practices, improving in production yields up to 3 tons per hectare. Production in other parts of the country stood at below 2 hectares per ton (Henderson & Nellemann 2011, p. 8).

Extending the program to cover the entire supply chain

With Unilever’s East African estates accounting for about a third of the company’s total tea requirement, the partnership with Rainforest Alliance registered immense success. The involvement of the Kenyan government through the Kenya Tea Development Agency (KTDA) supplemented Unilever’s efforts on sustainability.

Equally, a Dutch Sustainable Initiative known as IDH helped the programme achieve greater success by training field trainers. The KTDA alone accounted for up to 62% of the country’s total production through its 59 factories. Unilever purchased 40% of KTDA’s total production in 2011.

Training of lead farmers by the company in conjunction with the KTDA and Rainforest Alliance increased awareness, including on the premiums paid on certified tea. Although some changes were easily applied, including convincing farmers to leave cut crop in the farms to rot rather than burning.

However, some changes involved expensive practices, such as the use of expensive protective gear for the farmers while spraying the farms. KTDA helped in supporting the programme by setting up a micro-credit scheme that provided financial support to the farmers. With the introduction and implementation of additional sustainable practices, the total yields improved between 5% and 15%. The quality of the tea produced also improved.

Promoting the sustainable message to the consumers

For Unilever to transform the success of sustainable tea into sales, the company’s commitment moved into informing the market its benefits. The varied tea brands under the company’s larger tea portfolio became a challenge to these plans. Although the ethical position of a brand pleases a majority of users, the idea of ‘green’ brands was difficult to sell.

Unilever, instead, looked at the whole idea of sustainability as an innovative marketing message targeting the consumers. Other Unilever tea brands in Western Europe and Australia benefited from an extensive certification programme launched after the East African pioneer programme. The brands included Lipton Yellow Label, Lyons, as well as PG tips.

In the U.K., Unilever’s tea market that represents about 10% of the entire production of the firm was represented by the PG tips brand. The biggest competitor of Unilever tea, Tetley Tea, shared the market almost on equal proportions with PG tips. The market lacked interest to purchase the green products at an added cost.

Unilever spent €12 million to market the new product in 2008, although it took between 12 and 18 months to tackle mental barriers and pass the message to consumers. The company found challenges in selecting the most appropriate message that would resonate with the consumers thinking while marketing the product.

The message selected, ‘do your bit: put the kettle on’ highlighted the optimistic action that buyers could take through their drinking of the PG tips. The campaigned saw PG tips emerge as the leader in the market, beating the strong competition by Tetley Tea.

In particular, PG tip’s market share increased by 1.8 points with the purchase repeat rate increasing to 49% from 44%. The total overall sales of the brand improved by 6% with research attributing the rise to consumers’ changed perceptions. PG tips successfully marketed as an ethical product and the market positively responded to the efforts.

Australia

The sustainable tea campaign in Australia began in the year 2009. Lipton was Unilever’s leading tea brand in the market, with its total share accounting for about a quarter of the entire sales. Bushell, the other of Unilever’s brand had a market share of about 13%.

The marketing phrase read, ‘Make a Better Choice with Lipton, the world’s first Rainforest Alliance certified Tea.’ The marketing campaign cost €1.1 million covering print, television and public relations. Additionally, Unilever adopted in-store promotions to increase awareness further. Premium charge on certified tea served as a barrier to consumption and the company eliminated it.

Sales performance increased by 11%, with Lipton brand’s market share improving by 158 basis points. The average purchase value rose to €3.23 from €3.11. Despite the success in sales performance, the Lipton brand failed to improve in as far as perceptions on quality is involved.

Italy

Unilever tea enjoyed a 12% market share in Italy in 2010. The certification programme cost €3 million and involved awareness creation programmes on television, online, press, packaging up-dates, and in-store promotions. The marketing message adopted read, ‘your small cup can make a big difference’.

With the campaigns first launched in 2008, the Lipton sales increased by 10.5%, with its market share also increasing by more than 2 percentage points. The buyer base increased, with the younger consumers mostly from the upmarket segment being attracted to the certified product (Henderson & Nellemann 2011, p. 12).

France

France posed a great disappointment to the sustainable tea programme by Unilever. Lipton’s market share stood at 37% in 2010, with private label brands being the main competitor at between 30% and 40% market share. With a more diversified portfolio, the tea products under Lipton numbered at least 40. The certification message initially was only associated to the black tea product Lipton Yellow Label.

This represented only a paltry one fifth of the sales. Campaigns initially focused on public relations to educate the retailers. It also involved journalists and key opinion leaders. The marketing message, ‘your tea can make a difference’ appeared in print advertisements and strategically in cooking and travel magazines. Female users over 50 years old remained the primary market focus of the campaigns.

Research findings indicated little success in French consumers’ likelihood to buy certified tea containing Rainforest Alliance seal. However, the company changed stance later on and changed the packaging. Consumers failed to associate the new sales on packaging with any quality certification. Failure to associate Lipton with Rainforest Alliance on the part of the consumers played a big role in the negative results that were recorded by the brand.

The USA

Unilever launched its campaigns in 2009, mainly focusing on the green tea line. Overall, Lipton’s market share was the second largest. Initial research by Unilever indicated 80% likelihood to buy eco-ethical products, although additional cost could not be justified easily.

The only market size willing to forfeit a premium was a paltry 5%. The marketing message adopted read, ‘Your Small Cup Can Make a Big Difference’ and appeared on print, TV, and online content. Sponsored trips to the company’s Kericho estate in Kenya formed part of the marketing campaigns.

Challenges to the certified product campaigns

Sourcing certified tea from India posed a great challenge as the country’s many suppliers were of small scale. Training the small-scale producers was a challenge because of the numbers involved. Additionally, unlike the Kenyan situation where the government supports tea programmes through the KTDA, the Indian government does not participate in such activities.

The Rainforest Alliance’s principles on certification, which involved an age limit on employment at age 15, did not tally with the practice in India. The country’s laws allow for 14 year olds to be employed as labour in the farms. The Paraquat pesticide use in India is also widely practiced, which is against Rainforest Alliance’s principle on reducing toxic substances.

Although the sustainable plan is intended to be applied across the board, there are challenges on other products that are not marketed directly to the consumers. Palm oil, for instance, is used as a raw material for processing other finished products. Introducing quality and certification plan for such commodities is a big challenge to the firm (Henderson & Nellemann 2011, p. 17).

Conclusion

Sustainable Living Plan is a marketing programme introduced by Unilever to enhance the performance of its agricultural based products in the market. The programme aims to employ practices that not only aim at improving on productivity, but also the quality of products.

The company’s tea products portfolio has particularly seen efforts employed to improve on performance. To enhance the results of sustainability, Unilever collaborated with a certifying company, Rainforest Alliance, a founder member of the Sustainable Agriculture Network.

This decision was arrived at mainly because Unilever’s sustainability plan involved similar principles as those of the certifier. These principles include social and environmental management system, wildlife protection, ecosystem conservation, water conservation, as well as occupational health and safety measures.

Other principles include integrated waste management, integrated crop management, community relations, and fair treatment of the workers. The certification plan was the first one of its kind and encountered several challenges. There were no previous existing standards and Unilever had to begin the implementation on its company-owned estates in East Africa, in Kenya and Tanzania.

The rollout plan involved leaving cut tea bushes on the farm to rot rather than using as cattle feed and firewood. Lead farmers were chosen and trained on how to implement the programme on their colleagues. Employees had their remuneration improved more than two-folds while working conditions were also improved.

Health, education, and housing facilities for the workers and their families were introduced free of charge. In Europe, elaborate marketing campaigns were also initiated with mixed results for the company. In the UK, Italy, Australia, and the USA, the brand registered positive results as sales increased.

However, the market was not willing to pay a premium for the certified tea. In France, marketing campaigns failed to achieve any positive results. Despite expensive marketing campaigns introduced by the company, convincing the market to link certification to quality did not succeed.

List of References

Henderson, RM & Nellemann, F 2011, Sustainable tea at Unilever, Harvard Business School Publishing, Bolton, MA.

All businesses that operate in a dynamic world often face challenges beyond their control. In order for every business to succeed, these external factors must be taken into consideration (Buxton & Chapman 1998). Therefore, every business strategy must recognize these forces to identify threats and available opportunities and use them for its benefits.

Failure to react to the external environmental changes may lead to lose of customers. Since the existence and success of business are dependent on its customers, it is therefore worth noting that external environment is the existence of the business (Roy 2009).

Twining Tea Company considers the following external environment factors (microenvironment) in the process of positioning itself in Hull in the UK market to increase its sales in December 2011. Market The tea market in the UK has been steadily growing over the past five years (Stillwell & Clarke 2011).

According to Jonny Forsyth, senior drinks analyst at Intel, the recent economic climate has played a big part in consumer attitudes to tea and two of the worst winters on record have assisted the market, not to mention heavy discounting activities.

However, this report claims that the trend is unlikely to continue if new customers are not attracted (Roy 2009). To improve its positioning, Twining Tea will focus its activities to the unexploited market of young people. This will also ensure market continuity when the old fall out of market.

Customers Hull that has a population of over 258000 currently provides a wide customer base for Twining Tea products (Chen & Tsang 2000). A quarter of its population comprise of the people under 20 years who do not consider tea as their favourite drink.

Success in Hull is therefore greatly dependent on winning this young generation. To achieve this, the company will carry out massive advertisement campaigns aimed at changing attitude of the youth towards their production (Buxton & Chapman 1998). No business is able to survive if the demand for their products is not sufficient to maintain production. This is therefore crucial for tea industry.

Competitors Competition in the tea market in the UK is very high. Five brands, such as PG Tips and Tetley, Premier Foods, Associated British food, and Betty & Taylors dominate the UK market (Stillwell & Clarke 2011). In order to be competitive during the Christmas period, Twining Tea Company will have to cut into the leading companies’ market share.

This will involve taking drastic measures such as significant price reduction, use of shorter channels of distribution and increasing quality (Roy 2009). Reducing price will broaden customer’s base by bringing those who cannot afford to buy such products. Product line, such as revive and cleanse infusions, which are slow movers, can be sold at lower prices quite well (Martin 2007).

Cutting of operational costs may also help to reduce prices. To achieve this, the company will hire less expensive labour (Chen and Tsang 2000).

Most of Twining’s tealeaves are imported. Camellia sinens is from China, Japan and Darjeeling while Camillia sinens is assamica tea from North India. In order to cut further on cost, the company may use locally produced tealeaves of the Tregothnan Estate, an emerging tea estate in the UK where the weather is similar to that of Darjeeling-India (Martin 2007).

Suppliers

Being one of the most important stakeholders, their full cooperation will ensure smooth operation and success. To make sure that the cooperation will be full, the firm will pay them timely at the competitive rates.

References

Buxton, T & Chapman, P (eds) 1998, Britain’s economic performance, Routledge, London.

Chen, Z-Y & Tsang, D 2000, ‘Degradation of green tea catechins in tea drinks’, Journal of agricultural and food industry , vol. 49, no. 1, pp. 477–482.

Martin, C 2007, Tea: The drink that changed the world, Tuttle Publishing, Tokyo.

Roy, K 2009, The marketing of tea, Intertrade Publications, New Delhi.

Stillwell, J & Clarke, M (eds) 2011, Population dynamics and projection methods, Springer, London.

Lipton Tea Industry Competitors

Lipton Tea firm represents a global expert at tea production industry. The universal success of this company is referred to the exceptional quality of the products. It provides the customers with flavonoid antioxidants, which accounts for weight management and free radicals rupture (Strategic marketing management-Lipton tea, 2003).

The firm adopted a red ocean strategy of production since it serves as a distributor of a wide-spread product type. Therefore, the management of the company should be always committed to tea market innovations so that to prevent possible outrivaling. Moreover, according to the regulations of the strategy type, Lipton Tea established a link between its primary activities and its business strategies choices.

Despite the production of Lipton Tea possesses the highest ratings in the sphere of tea marketing, the company stays in constant opposition to such rival firms as Tetley Tea and Society Tea (Lipton tea: SWOT analysis, 2013). The former represents the culture of British beverages and holds a position of the world’s second largest distributors of tea. The power of the brand consists in its products diversity and persistent innovation of manufacture processes.

Thus, the firm provides the celebrated Blend Tea Collection, Peppermint Mix as well as Super Green Tea, etc. Nevertheless, the prolong strives of the company to take an upper hand over Lipton goes in vain since the latter surpasses Tetley Tea in both quality and advertising strategies.

The Society Tea brand occupies the third place in the world ratings of tea manufacturing. This type of beverage attracts the customers through the excellent quality of Indian aroma leaf blends that constitute the base for beverage production. Despite its authentic Asian taste, this type of tea concedes with Lipton, for it provides a limited collection of black tea. Thus, the firm lacks originality and innovation.

The Estimation of Lipton Tea Competitive Advantages

The most prominent strategic advantage of the Lipton Tea company is the introduction of the high-quality ice tea production, which was first embraced by the firm. The product that quickly became a healthy substitution of soda water gained many appraisals from the world tea-lovers. Therefore, the threat of new entrants into the industry regards the manufacturing of cold tea products. Consequently, the firm maintains a sustainable innovation of ice tea products throughout its functioning so that to prevent the possibility of being outrivaled.

The company is famous for the powerful cohort of active buyers. The product falls into the category of the daily goods, which are famous among the customers from the whole world. Therefore, Lipton Tea that possesses the highest production ratings accounts for the large percentage of the clients costs.

The possibility of suppliers substitute is irrelevant in regard to the Lipton Tea firm, for the company receives the production materials from one of the most famous tea estate, Unilever, which partly accounts for the global success of the product (Bouckley, 2013).

The Lipton Tea value chain embraces the steps of producing, processing, trade, tea company delivery, and retailing. The successful strategy of the firm production dwells on both the high-quality Unilever materials and marketing strategies.

Since the production of Lipton Tea is on the top of beverage marketing and possesses a long history of development, there are no exit barriers that might hinder the process of the company closure. Thus, despite the workers of the firm possess some specialized skills, their abilities may be utilized in parallel industries. The threat of individual equipment investment does not apply to the case as well, for the tools that are employed by Lipton Tea manufacture firms can be sold to any tea-production companies (Barriers to entry and exit, 2007).

Lipton Tea Business Level Strategy

The immense success of the Lipton Tea strategic foundation dwells on two major factors, which are products variety and quality. Thus, the tea-based beverages that are offered by the firm evolve in a broad range of forms. Mainly, the company promoted the active lines of zero calories green tea, ice tea mixtures as well as a variety of collections of traditional leaf and bag tea.

The constant innovation draws the crowds of new clients as well as maintains the interest of the regular buyers. Finally, Lipton Tea production is based on the usage of the high-quality Unilever estate leafs, which contributes to the establishment of effective business maintaining.

References

Barriers to entry and exit. (2007). Web.

Bouckley, B. (2013). The Lipton factor: Unilever spends doubles size of Tanzania tea business [Press release]. Web.

Lipton tea: SWOT analysis. (2013). Web.

Strategic marketing management-Lipton tea. (2003). Web.

Introduction

Starting a refrigerator ice tea business is an overwhelmingly interesting businesses idea which potential of yielding admirable results. This is aimed at the provision of refrigerator ice tea to a wide population of customers. All age groups of the population will be targeted by the business following the nature of products which are consumable by all people.

Refrigerator ice tea business is a start up business in the wider tea market which will offer solution and satisfaction to the needs of the population. The business has been a viable idea following the gap in the tea market and more specifically the provision of ice tea to consumers.

The core product of the business is a gallon ice tea which has been a favorite product for many people. The business will highly inclined to ensure full satisfaction of its customers thus being able to attain market leadership.

Tea market

The tea industry has one of the most lucrative and potential in the economic sector. Based on its nature of dealing with food products, the market stands to be highly potential and sustainable. It is worth noting that the tea market which lies under the wider food industry stands a chance to offer very lucrative opportunities. This is so because food is a basic commodity that is required for human survival.

It has been noted that the market for tea has been in a relevant and continuously expanding trend. The consumers of the product have been identified to be in an ever-expanding trend thus brightening the future of the market. The knowledge concerning the use of tea has been adequately conveyed through the use of modern technology and more specifically the internet.

This has been a good aspect in diversifying and widening the market of the commodity. The production of tea has been magnified in recent days following the mechanization of agriculture. These phenomenons have made the commodity not only accessible but also popular among many people (Boone and Kurtz, 2011).

A point worth of consideration is that the tea market in Europe and America has been very stable following the high demand of the product which is attributed to its potentiality in countering the effects of the cold weather. This aspect has made it a very potential and business. It should be observed that the competition in the market has been intensifying significantly following the awareness on the lucrative nature of the market.

This has however not bridged the demand gap following the wide population of the market. Based on these insights, it is very explicit that the tea market stands to be a lucrative and sustainable venture. Refrigerator ice tea is in this case at a very potential position in exploiting the gap in supply of the products thus being able to mobilize high profits (Boone and Kurtz, 2011).

Location and operation of the refrigerator ice tea business

The business will be located in Wall Street, Ney York, which is in this case a very busy commercial area. The location of the business has been adequately selected to ensure the attainment of a ready market that will be able to meet the business expectations. Being a busy commercial area, the positioning of the business in Wall Street will be able to capture the attention of a wider population of customers.

The business will be primarily aimed at the provision of refrigerator ice tea. This will also be accompanied by some snacks like pizza, and hot dog. These area readily selling products which are taken together with ice tea.

Through the specialization on these products, the business will be able to ensure high efficiency in its operations. A point worth of consideration is that the selection of the products as well as the location of the business has been influenced by the market needs and gap in the provision of the product. Based on this phenomenon, the business is at the potential of succeeding in the market (Allen, 2009).

Marketing

The business is targeting the working class in the surrounding. The Wall Street is overwhelmed by a wide population of people thus making it a highly potential location. The business will target business and corporate personnel in this region, youth and children who visit this street will also be targeted.

Online marketing is a core tool that will be adopted by the business to reach its market. This will be done through the company’s website, whereby a customer’s web page will be designed. The concept of public relations will also be adopted in marketing, whereby it will help in enhancing the business image (Allen, 2009).

SWOT Analysis

Strengths

Technology: The business is better placed in the use of modern technology in the preparation of products, logistical management as well as marketing. This is of great importance in enhancing the efficiency of business. Through the use of internet marketing, the business stands a better chance of reaching a wider market.

On the other micro waves will also be used in the preparation of the ice tea as well as snacks thus boosting efficiency in customer service (Allen, 2009).

Societal: The Company is ell placed in meeting the societal needs. This is in regards to the high demand of tea in the region. The society is presently highly informed through the quality and advantage of taking tea. The company products are highly demanded by the market following the severe weather conditions.

The issue of technology has been adequately developed among the population, thus boosting the company’s marketing strategies. Based on this societal status, the success of the company is enhanced, following the provision of ready market (Kurtz and Boone, 2008).

Legal: The legality of the company’s products is beyond doubt. This is in consideration to the prevailing market conditions, whereby the need for beverages and food is necessary. The business will also follow the due procedure of registration, thus avoiding any controversy concerning its legality (Pride et al, 2010).

Competitive: The issue of competition in the market where the company operates has been the greatest strength of the company. Despite that the tea market has attracted many players; this company stands a chance to succeed.

This is in relation to the efficient marketing strategies that will be adopted by the business. For instance, the issue of internet marketing offers the business a chance to prevail in relation to its competitors (Allen, 2009).

Economic: The economic environment is also favorable to the success of the company. This is in relation to the high population as well as the high economic activities. The high populations in the Wall Street who are mostly in the middle class offer a potential market for the business. This is a vital aspect in meeting the needs of the business and a key strength of the company thus justifying its success (Kurtz and Boone, 2008).

Weaknesses

Despite the much strengths of the company, it is also overwhelmed by various weaknesses which jeopardize its success.

Technology: The concept of technology has not been adequately addressed by the business in improving its services. In this case, the business has not been able to plan for the use of computerized ordering systems for customers. Human labor has been favored in this case, which is not adequately efficient.

This is not efficient and there is great need for modern technology should be adopted thus boosting the satisfaction of customers. The use of technology in internal management and communication is lacking, thus the need for improvement (Pride et al, 2010).

Societal: The business is presently not engaged in any societal development oriented program. The concept of social corporate responsibility and strong public relations has not been undertaken by the company.

Legal: It has been evident that strong legal structures for governing the business operations with other businesses and resolution of conflicts is lacking. This creates loopholes which may in turn jeopardize the operations of the company as well as relations with stakeholders (Allen, 2009).

Opportunities

The company is overwhelmed by various opportunities in the market.

Technology: In regards to technology, the company has great opportunities in provision of its products. The business has the potential to adopt computerized ordering systems, which will help in serving more costumers within short time durations.

In addition, the business is also empowered with a strong Research and Development team which will definitely come up with better technologies for preparation of its products (Allen, 2009).

Societal: There is a rapid increase in population, which means new demand for the company’s products. Increase in population translates to increased business activities which in turn raises the demand. This phenomenon brightens the future of the business in expanding its operations (Pride et al, 2010).

Legal: The legal powers offered by the business through its registration and certification in offering refrigerator ice tea in the Wall Street are a great opportunity. This is so because the company has the freedom to open its operation in new locations based on the absence of close competitors (Kurtz and Boone, 2008).

Competitive: The liberal nature of the market is a great opportunity for the business in the sense that it can expand its operations incase of need. The use of technology in preparation of products as well as in marketing is a great opportunity for the business to outcompete its opponents (Pride et al, 2010).

Economic: The economic state of the market is expected to grow rapidly following the increase in population as well as liberalization of the market. This means higher market activities thus guaranteeing better opportunities for the company (Allen, 2009).

Threats

Technology: The advancement in technology is a key threat to the success of the business in the sense that new businesses are taking charge of online marketing. This puts the business at higher state of competition, thus dooming its success. New products tea products may also crop up as a result of technology thus threatening the prevalence of the refrigerator ice tea (Kurtz and Boone, 2008).

Societal: there is a significant change in trend concerning the use of fast foods. In this case, people are gaining more awareness on the need to prepare their foods at home in fear of hygiene related issues. This threatens the potential demand of the business’s products. This will in turn decrease demand of the services of the company (Kurtz and Boone, 2008).

Competitive: The lucrative nature of the tea market as well as the increasing demand of tea products is likely to induce more players to enter the market. This will definitely threaten the market dominance enjoyed by the business (Kurtz and Boone, 2008).

Conclusion

Based on the analysis of the team market, it is evident that it is highly potential in offering lucrative opportunities. In this regard, refrigerator ice tea business stands a chance of excelling in the market.

References

Allen, M. (2009). Visionary Business: An Entrepreneur’s Guide to Success. London: Routledge.

Boone, L. and Kurtz, D. (2011). Contemporary Marketing. New York. Prentice Hall.

Kurtz, D. and Boone, D. (2008). Contemporary Business 2009 Update. London: Wiley & Sons Press.

Pride, W. et al. (2010). Foundations of Business. New York: McGraw Hill Press.

Introduction

Incorporation of sustainable management is one of the issues that organizations in different economic environment are increasingly being concerned with (Rendtorff, 2009, p. 151). Sustainable management entails combining corporate social responsibility with ethics. According to Salzmann, (2008, p.12), incorporating the concept of sustainable management in a firm’s strategic management processes contributes to its long-term success. This is due to the fact that it enables a firm to achieve its social, economic and environmental goals (Salzmann, 2008, p. 13).

Business ethics is one of the social obligations that organizations in different economic sectors have to take into consideration in their operation (Maheshwari, p. 45). According to Maheshwari (1997, p.45), integration of business ethics can contribute towards attainment of sustainable development. Brown (2005, p.40) further asserts that business ethics are more than a legal requirement that an organization have to observe. However, they are self-imposed and require an organization to be fair in dealing with the various stakeholders such as suppliers, consumers, the government, competitors, employees and the society in which a firm operates (Carroll & Buchholtz, 2011, p. 45).

Within the business environment, ethical theories legitimize incorporation of various practices in the operation of firms (Brooks & Dunn, 2010, p. 19). Additionally, they also emphasize on the importance of establishing an honest and long term relationship with the stakeholders.

There are numerous benefits that a firm can attain as a result of integrating effective ethical foundations in its strategic management. For example, adoption of strong business ethics enables an organization to incorporate effective self-regulation policies. The result is that a firm is able to avoid possible external controls for example by the regulatory agencies (Maheshwari, 1997, p. 45).

Maheshwari (p.46) further asserts that incorporation of ethical practices within an organization enhances its brand equity. Additionally, integration of strong ethics within an organization can result into increment in the level of productivity, creativity and motivation amongst the employees. The resultant effect is that the firm’s long-term success and prosperity is increased (Maheshwari, 1997, p.46).

Trevino and Nelson (2010, p.3) are of the opinion that the success of a particular business organization and its profitability cannot be separated from the values and ideals that it has integrated. By divorcing business operations from ethical values, an organization runs into the risk of failing (Trevino & Nelson, 2010, p. 3). Therefore, it is difficult for a firm to succeed into the long term within integration of good ethical foundations.

Lipton Tea is a private limited company that was established in 1890 by Thomas Lipton. The firm operates within the tea industry in the United Kingdom as a subsidiary of Unilever Company. Over the years that it has been in operation, Lipton Tea has been very successful. This is evidenced by the extensive distribution network that the firm has developed. Its Lipton tea brand has attained market leadership within the global tea industry (Unilever, 2007, para. 7). One of the factors that have led to the firm’s success relates to the effectiveness with which it has developed its ethical foundations. This paper is aimed at evaluating the ethical foundations incorporated by Lipton Tea Company in an effort to attain sustainable management.

Ethical foundations of Lipton Tea Company

In its operation, Lipton Tea Company has incorporated a number of ethical foundations that have significantly enhanced its success. Additionally, the ethical foundations incorporated have enabled the firm to conduct its operations social responsibly. Some of the firm’s ethical foundations are discussed below.

Bowie and Schneider (2011, p.43) are of the opinion that most business organizations consider their main ethical obligation towards the environment to be stipulated by the various environmental laws. However, some businesses have formulated a number of theories to illustrate the impact of protecting the environment in attaining sustainable development. Bowie and Schneider (2011, p.43) further opine that businesses are charged with the responsibility of ensuring that their operations do not destroy the environment within which they operate thus making it inhospitable for human life. As a result, it is a requirement for organizations to integrate human-centered ethics in their effort to attain sustainable management (Bowie & Schneider, 2011, p. 43). Organizations are also charged with the responsibility of protecting animal rights. Finally, businesses are required to protect the environment irrespective of whether their actions will harm human beings, animals or cause any environmental damage.

In its operation, Lipton Tea Company has attained an optimal market position as a result of its commitment towards environmental conservation (Lipton, 2010, para. 1). The company has integrated environmental protection as one of its ethical foundations. Additionally, the firm has appreciated the importance of taking care of its employees. In an effort to ensure that it produces high quality tea, the company has incorporated sustainable farming practices in all its tea plantations in different parts of the globe. Additionally, the firm’s commitment towards conservation of the environment is evidenced by the recent tree planting program that it developed. The program which is referred to as ‘Trees 2000’ is aimed at curbing the high rate of deforestation in the third world countries where it operates (Uniliver, 2009, para. 3).

As a result of its commitment towards environmental protection, Lipton Tea Company received the Rainforest Alliance Certification which is an award that recognizes companies that are committed towards creation of sustainable livelihood and conservation of biodiversity around the world (Lipton, 2010, para. 1).

As a sign of its commitment towards environmental protection, Lipton Tea Company ceased from using animals to test the quality of its tea products on January 2011 (Ulibarri, 2011, para. 1). From 2004, the firm has been committed towards development of alternative methods of testing the quality of its tea products. This decision was arrived after the firm faced intense pressure from People for the Ethical Treatment of Animals which is a body that fights for the rights of animals (Ulibarri, 2011, para. 3).

According to Webb, Cohen, Nath and Wood (2005, p.17), most manufacturing firms have incorporated consumer safety as one of their ethical practices in their operation. This trend has arisen from the fact that the consumers are increasingly becoming health conscious in their consumption patterns (Webb, Cohen, Nath & Wood, 2005, p. 17). In its operation, Lipton Tea Company is committed at ensuring that its products are of high quality. One of the ways through which the firm achieves this is by incorporating a strong value chain. The value chain is aimed at ensuring that its tea products meet the predetermined standards. The value chain stipulates how its tea products should be produced right from the farm to when the final product is developed. Additionally, the firm has integrated sustainable agricultural practices in an effort to improve its profitability (Lipton, 2011, para. 1).

The company ensures that it produces an optimal quantity of tea that is of high quality per unit area. In its tea plantations, Lipton ensures that no unacceptable pesticide is present in the tea leaves harvested (Lipton, 2011, para. 1). Additionally, when harvesting its tea product, Lipton has incorporated both mechanical and semi-mechanical harvesting methods. In all these methods, the firm ensures that the quality of the tea leaves is not negatively impacted (Lipton, 2011, para. 4). To meet the market demand, the firm also sources its tea leaves from the local tea farmers. To ensure that the tea leaves collected from the local farms are safe for its customers, the firm has formulated a policy that outlines that all its tea leaves should be bought from ethical and sustainable sources (Unilever, 2011, para. 1). The firm’s commitment to customer safety is also evidenced by the fact that it has incorporated certification of its tea products by Rainforest Alliance Company (Unilever, 2007, para. 2).

To improve the quality of its final product, the company has incorporated good manufacturing practices in its tea process (Stanwick & Stanwick, 2008, p. 45). Additionally, the firm has also incorporated the concept of value addition in an effort to maximize the value of its product. Its tea products are well packaged so as to ensure product safety (Lipton, 2011, para. 7). The resultant effect is that the firm has been able to develop a high level of satisfaction amongst the consumers.

To ensure that its customers are satisfied, the company has incorporated the concept of continuous product improvement. This has significantly enhanced the firm’s competitive advantage. In an effort to ensure that the firm survives in the long term, Lipton Tea is continuously improving its plant breeding processes. The objective is to develop planting materials that are efficient and of high quality hence improving the safety of its products (Reidenbach 2009, p.645).

Ethical strategies that the company may incorporate to guide its ethical behavior

One of the major challenges facing the world today relates to high rate of climate change which has arisen from global warming. Global warming has arisen from an increment in the amount of greenhouse gases that are being emitted into the atmosphere. In their operation, firms in different economic sectors contribute to global warming through the gases that they emit. However, firms are required to operate in an ethical manner; for example, they should not emit greenhouse gases into the atmosphere (Paul, 2004, p.103). In order to limit the amount of greenhouse gases that emanate from its operation, Lipton Tea Company should consider incorporating the concept of carbon-neutrality. This entails ensuring that the firm emits zero amounts of greenhouse gases into the atmosphere (Collins, 2009, p. 255). One of the ways through which a firm can attain carbon neutrality is by purchasing carbon offsets which are equal to the amount of their carbon footprint.

Some of the carbon offsets that Lipton Tea should consider integrating include planting trees and other forestry projects. Investing in tree planting projects will aid in extracting a significant proportion of carbon dioxide emitted from the firm’s operations from the environment (Collins, 2009, p. 255). To attain carbon neutrality, it is critical for Lipton Tea to consider integrating the concept of carbon foot printing. Carbon foot printing strategy enables an organization to determine the amount of greenhouse gases emits into the atmosphere as a result of its operation.

According to Wilhelm (2009, p.12), carbon foot printing enables an organization to make adjustments to its corporate strategies. This arises from the fact that it enables a firm’s management team develop a concrete understanding of the business operations that are carbon contributors As a result, the firm will be able to minimize its carbon emissions. Additionally, integration of carbon foot printing contributes towards an organization improving the efficiency of its operation. This arises from the fact that the management team is able to identify organizational areas which are characterized by inefficiencies (Wilhelm, 2009, p. 12). To be effective in its carbon footprinting process, Lipton Tea Company should develop an effective carbon foot printing process that is composed of the following steps and activities.

Taiyab (2006, p.3) asserts that carbon offsets enables an organization to neutralize an equivalent amount of carbon dioxide emitted into the atmosphere. For example, if one ton of carbon dioxide is emitted in the firm’s operation, carbon offset neutralizes an equivalent amount. In order to limit its contribution towards climate change, Lipton Company should consider purchasing a number of carbon offsets. Some of these offsets that the firm should integrate include incorporating a tree planting program. By planting trees, the firm will be able to extract a significant proportion of carbon dioxide from the atmosphere. Additionally, integration of a tree planting program will enable the firm to protect the environment from deforestation. The resultant effect is that the firm will be able to curb the adverse effects of climate change.

Lipton Tea should consider integrating alternative forms of energy (Cowton, 2010, p.60). One of the most important forms of energy that the firm should consider incorporating is renewable energy. Some of the renewable forms of energy that the firm should consider using include solar energy, nuclear energy, wind energy and bio fuel. The solar, nuclear and wind energy should be used in running its machines (McDaniel, 2004, p.67). On the other hand, the bio fuel energy should be used in its transportation processes.

Conclusion

The analysis above has shown the importance of integrating effective sustainable management practices in firms strategic management processes. One of the ways through which a firm can attain sustainable management is by integrating ethics and corporate social responsibility. Through integration of effective ethical foundations, a firm’s long term success is enhanced. This arises from the fact that its public image is enhanced which results into improvement in the level of customer satisfaction. Additionally, integration of ethical foundations results into elimination of external controls by the government.

In its operation, Lipton Tea Company has been very successful. One of the factors that have contributed to its success relates to integration of effective ethical foundations. Some of the main ethical foundations that the firm has incorporated in an effort to attain sustainability relate environmental protection and customer safety. As a part of its ethical foundations, Lipton Tea is committed at ensuring that its operations do not result into environmental degradation. For example, in all its tea plantations, the firm has integrated sustainable agricultural practices. Additionally, the firm has also incorporated a tree planting program which is aimed at curbing deforestation. The firm’s commitment towards the environment is also evidenced by its recent abandonment of using animals to test the quality of its tea. This illustrates the firm’s commitment towards animal rights. The resultant effect is that the firm has attained environmental sustainability.

The firm is also committed towards customer safety. One of the ways through which the firm attains this is by ensuring that the tea produced is of high quality. In order to achieve this, the firm has incorporated effective agricultural practices in its tea plantations in an effort to improve the quality of its tea. For example, the firm has integrated an effective value chain that is aimed at ensuring the entire tea production process is safe. In an effort to improve the level of customer safety and satisfaction, Lipton Tea Company has also integrated the concept of value addition and continuous product improvement.

The analysis has also illustrated some of the strategies that Lipton Tea Company may incorporate in an effort to guide ethical behavior within the firm. One of these strategies relate to attainment of carbon neutrality. This strategy will entail ensuring that all the operations by the firm result into zero emission of greenhouse gases. The resultant effect is that the firm will be able to limit the amount of emissions that contribute to global warming and hence the climate change being experienced.

Recommendation

In order to achieve sustainable management hence growth in its operation, it is paramount for the management team of Lipton Tea Company to improve its ethical foundations. To achieve this, the firm should consider the following.

1. Lipton Tea should enhance its environmental protection strategies by incorporating the opinion of the various stakeholders in its quest to attain environmental sustainability. To achieve this, the firm should not only focus on its effect on human life. However, its environmental protection policy should be comprehensive by incorporating its impact on animal life and the ecology.
2. In its quest to ensure that it produces high quality products, Lipton Tea Company should incorporate the concept of internal quality control. This will ensure that all its operations are in line with the stipulated quality standards.
3. To minimize its contribution towards climate change, Lipton Tea Company should integrate the concept of carbon neutrality. One of the ways through which the firm can attain this is by developing an effective carbon foot printing process so as to determine the amount of carbon it emits into the atmosphere. The resultant effect is that the firm will be able to incorporate effective carbon offsets.
4. To attain carbon neutrality, the firm should consider using renewable sources of energy in addition to integrating tree planting programs.

Reference List

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Brooks, L. & Dunn, P., 2010. Business and professional ethics for directors, executives and accountants. Mason: Cengage.

Brown, M.T., 2005. Corporate integrity: Rethinking organizational ethics and leadership. New York: Cambridge University Press

Carroll, A. & Buchholtz, A., 2011. Business and society: Ethics, sustainability and stakeholder management. Mason: Cengage.

Collins, D., 2009. Essentials of business ethics: Creating an organization of high integrity and superior performance. New York: John Wiley.

Cowton, C., 2010. Business ethics: A European Review. Journal Of Business Ethics Review. 6(2), pp.60-64.

Lipton. 2011. Promoting people: Value chain. Web.

Maheshwari, R., 1997. Principles of business studies. London: Pita bar Publishing.

McDaniel, C., 2004. Organizational ethics: research and ethical environments. New York: Ash gate publishing.

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Rendtorff, J., 2009. Responsibility, ethics and legitimacy of corporations. Germany: Copenhagen Business School Press.

Reidenbach, R. E., 1990. Towards the development of multidimensional scale for improving evaluations of business ethics. Journal Of Business Ethics. Vol. 9, issue 8, pp. 639-653.

Salzmanann, O., 2008. Corporate sustainability management in the energy sector: An empirical contingency approach. Weisbaden: Verglar Gabler.

Stanwick, P., & Stanwick, S., 2008. Understanding business ethics. New York, Prentice Hall.

Taiyab, N. (2006). Exploring the market for voluntary carbon offsets. New York: IIED.

Trevino, L. K and Nelson, K. A., 2010. Managing business ethics: straight talk about how to do it right (5^th Ed.). New York: John Wiley and sons Inc.

Ulibarri, S., 2011. Unilever eliminates animal testing for Lipton Teas. Web.

Unilever. 2007. Unilever commits to sourcing all its tea from sustainable ethical sources. Web.

Unilever. 2009. Lipton rainforest alliance certified tea. Web.

Wilhelm, K., 2009. Return on sustainability. New Jersey: Dog Ear Publishing.

Webb, L., Cohen, J., & Nath, L., & Wood, D. 2005. The supply of corporate social responsibility among US firms. Boston: Boston College.

Major Facts

Tea and More (TAM), a large tea company, was founded in Los Angeles in 1985 under the name Global Tea. In its early days, the founders did not chase money and focused on finding the finest tea sorts and shipping them from specific suppliers overseas. When Jack Reynolds took over the company in 1992, the focus shifted toward marketing, expanding the stock, and ramping up production. By the 2000s, the businesses had increased the annual revenue but run into a common problem commonly referred to as growing pains.

Major Problems

Tea production happens in several stages with the primary being shipping, packaging, and selling. Due to the complicated nature of the process and the only production facility located far away from the headquarters, the company has been experiencing problems with customer service. Customer dissatisfaction is a complex, multi-level issue, and as of now, it is clear that employee turnover, sales representatives’ demotivation, the lack of new ideas, and management style are all at fault. To untangle this, Reynolds and his team need to start with one underlying problem and then proceed with the others.

Possible Solutions

TAM might brainstorm for ideas and try to launch new products in line with customers’ tastes and expectations. This might generate a spike of interest and an increase in sales, but in the long perspective, experimentation might not be sustainable if the core issues remain untackled.

Reynolds seems to experience a lot of pressure and stress out over the company’s prospects which pushes him to take up too many responsibilities. He might consider changing his management style by reading self-development literature and hiring a business coach. In the process, he might feel relief and even adjust the workflow, but changes in a single person do not impact the entire company radically.

Addressing sales’ representatives demotivation, which accounts for the high turnover rate, might be time-consuming but worth it in the long run.

Choice and Rationale

Tea and More should consider Option C and focus on the employees’ engagement. They are the brand’s ambassadors and the mediators between the managing board and the customers. TAM needs a change that would come from within, and enhancing the corporate culture could be the key. Reconnecting with the sales representatives will help address all the other issues. A decreased employee turnover will mean a more effective passing of knowledge to new personnel. Engaged and happy staff will be more creative and generate more ideas regarding products and marketing strategies. Lastly, they will go the extra mile to check with the clients, remind them about payment dates, and gain feedback.

Implementation

The first way to achieve the goal would be by organizing coaching sessions where each employee’s potential would be recognized and motivation discovered. Facilitated small-group sessions were found to be beneficial for employees’ performance and showed long-term results (West et al., 2014). Second, it would be naive to think that the mission alone could drive a sales representative without appropriate monetary compensation. Reynolds needs to start listening to the employees’ complaints about transportation and out-of-pocket expenses and find a way to cover them. If the company’s budget allows for such a measure, it would not be unreasonable to entertain the idea of acknowledging individual achievements through bonuses. Lastly, the staff needs to know what is expected of them. Hence, the managing board could set weekly, monthly, and yearly goals to stimulate performance.

Appendix

What can we do about lost sales due to poor customer service by outside “contract” sales staff?

It is evident that sales representatives are demotivated and no longer want to make an effort. Jack should not blame them for being discouraged and instead, help them unlock their potential. First, his human resource team and should investigate the everyday stressors and try to eliminate them. Second, the world’s most successful companies pay plenty of attention to building a corporate culture. Strengthening social ties, organizing events, and fostering horizontal relationships might be the answer. Third, Jack needs to understand that while money cannot buy happiness, the lack thereof most certainly will make an employee unhappy. If he rejects the idea of raising salaries, he should pay for gas.

How can we restore the attractiveness and power of the TAM brand for major customers so they aren’t lured away by low-cost, low-quality competitors?

The brand has always capitalized on uniqueness and sophistication, which justified higher prices. TAM might want to continue showing customers what makes the company stand out among the contenders. For example, it might market its products as ethical and organic. Nowadays, many customers consider a producer’s vision and reputation when purchasing so that they might be won over by the ‘green’ rebranding.

How can we minimize “stock outages” and other inventory problems caused by the unpredictable customer ordering patterns and the continuing difficulty of getting faster production and delivery from EML in London?

TAM might benefit from past data analysis to predict future sales. Customers can be outstandingly unreasonable in their decisions, but a business owner can only do this much to motivate them to plan. First, since the company noticed that the same things happen every year, it can stock up on the most popular products and ensure that they are available up until the high season. Second, each interaction with a client can and should be personalized. A customer does not have a malicious intention by not purchasing enough and then demanding more products. Humans are forgetful and caught up in their routines, so a friendly, non-aggressive reminder via email might help.

How can we reduce collection time from 54 days to less than 40 days without alienating the very customer base TAM is trying to attract and retain?

When a business has to wait for the postal office to proceed with a payment, it might lose one to three days to the collection. Blaming customers for delayed payments is a natural but fairly unproductive way to react to the situation on hand. Now, payables and receivables can be easily calculated and terms adjusted so that the “float” time is reduced. The main problem is enforcing collection policies without repelling customers. One way to go about the issue is training personnel to use tracking software and making calls or sending letters with the payment is due. This strategy, however, might prove to be ineffective, and in this case, TAM might want to consider setting up a bank account for automated payments. This way, customers’ needs for easier money transfers would be met, and they would be more willing to comply.

What decisions should we make regarding experimentation with new tea varieties, such as the “Christmas Mint” tea that fell flat last season? Can we afford to continue such experiments? Can TAM afford to stick only to its basic teas and not compete in the “new and improved” tea market so heavily advertised by competitors?

It appears that the “Christmas Mint” flopped not because of its taste properties or overall quality but due to the poor effort to market it. Tea and More cannot afford to experiment with launching new products before developing a solid strategy. The marketing director might want to research the target audience and find appropriate advertising channels, be it traditional media or social networking. Apart from advertising, there is plenty of theoretical approaches such as VRIO-analysis that could be used to evaluate the uniqueness of an upcoming product. That being said, sticking to basic teas only contradicts the philosophy of the company built around rarity and sophistication.

What haven’t we thought of? Where else can financial advantages and process efficiencies be achieved?

Jack’s leadership style seems to be somewhat overbearing and could be classified as micromanagement. While caring about the company’s growth is a positive thing, his apprehension, and inability to delegate put a strain on his mental health and employees’ engagement. There is not enough information on how Tea and More handle human resources development issues, but the business would sure benefit from hiring a specialist that would evaluate the inner climate and offer solutions. Such a specialist could study the company’s vision closely and hire new staff in accordance with the company’s values. Further measures aimed at fostering a friendly corporate culture would reduce the turnover rate.

Reference

West, C. P., Dyrbye, L. N., Rabatin, J. T., Call, T. G., Davidson, J. H., Multari, A.,… & Shanafelt, T. D. (2014). Intervention to promote physician well-being, job satisfaction, and professionalism: a randomized clinical trial. JAMA Internal Medicine, 174(4), 527-533.

Introduction

The performance level of any product in the marketplace depends on its reception by the target consumers relative to other competing brands placed in the same market. Marketing encompasses one of the noble activities adopted by any organisation in an effort to create awareness of value for its products and services. A fundamental interpretation of the marketing function in an organisation is that marketing entails the art of selling.

However, selling is only a small fraction of concerns of marketing for a product like the Dilmah Ceylon tea brand since selling is accomplished in an environment dominated by various multinational competing brands such as the Unilever tea.

Marketing products involving stiff competition in terms of both value and volume entails market research, market segmentation, setting of marketing strategies, evaluation of the marketing environment, and positioning (Kotler et al. 2009). This paper considers these aspects of marketing in the discussion of the marketing of the Dilmah Pure Ceylon Tea brand in the Australian market.

Background to Dilmah Ceylon Tea brand

Ceylon (Sri Lanka) is located in the Indian Ocean and historically, the nation is famous for spices, beauty, and tea coupled with gems (Herath 2004). Natural resources coupled with the strategic location of the island made it primary area of interest for foreigners. In particular, foreign inversion by the Europeans was driven by spices coupled with the need to establish a base for control of India (Herath 2004).

The presence of the Europeans in Sri Lanka was particularly important in the development of Ceylon as an agricultural nation. According to Herath (2004, p.1), ‘by 1948, the most important export crops were tea (65%), rubber (13%), and coconut products (19%)’. Despite the size of Ceylon in the mid 1950s and 1960s, the country accounted for 20 per cent of all tea consumed across the globe. As depicted by appendix 1, tea has been an important crop grown in Ceylon between 1965 and 1998.

Although Ceylon tea was consumed in many countries since the commencement of tea exportation from Sri Lanka, the largest exportation to Australia took place between 1960s and 1970s. This exportation accounted for 70 per cent of the total tea consumed (Arambewela 2013).

Nevertheless, as Arambewela (2013, p.506) notes, ‘the Ceylon tea market share started to decline in the early 1980s, both in terms of volume and value, and an overhaul of the Ceylon tea marketing strategy was thus considered necessary to arrest this decline’. One of the adopted strategies involved rebranding Ceylon tea brand, while ensuring that the new brand continued to represent quality perceptions of the Ceylon tea brand amongst its consumers.

The above concern led to the creation of the Dilmah Pure Ceylon tea brand in 1984. During this period, the Australian tea market had many other competing brands at multinational and national levels. According to Arambewela (2013, p.506), these brands included ‘Lipton, Bushells, Lanchoo, Tetleys, Harris, and Twining’.

The brands had managed to establish an immense market share for tea Australia. This aspect made Dilmah Pure Ceylon Tea brand to encounter an immense threat whilst making a new entry in the market. This assertion means that marketing environment for the new brand was not welcoming. Any effort to develop a marketing strategy aimed at winning back the market share for Ceylon Tea brand established in the early 1960 to late 1970s called for scrutiny of the marketing environment for the brand.

Marketing environment for Dilmah Ceylon Tea

Products are offered for sale in a market comprising of substitutes. This assertion means that various factors influence successful placement and the actual sale of products in the marketplace. At an organisational level, such factors emanate either internally within an organisation or externally.

In an attempt to develop a successful marketing plan, it is crucial to conduct a thorough analysis of internal and external factors that affect the performance of a product in the market environment. Competition entails one of the factors, which shape the marketing environment. The figure below shows various factors, which shape competition.

Factors shaping competition in a marketing environment

Source: (Keller 2004, p.71)

A number of factors influence decisions made by the marketing team for any product including the Dilmah Pure Ceylon tea brand. From the PEST EL organisational analysis approach, these factors are political, economic, social, technological, environmental, and legal factors (Gerry, Kevan & Whittington 2005).

For the Dilmah Pure Ceylon tea brand, political environment affects the performance of the product via taxing policies since taxes are levied from the profit margins upon the selling of a product. These taxes are incorporated in setting of price of the tea products sold in Australia.

Since profit margins per item are lower for cheaper products, which may be of equal quantity and quality with Dilmah Pure Ceylon tea brand, cheaper brands are more likely to make higher sales volumes in comparison to Dilmah Pure Ceylon tea brand. The overall effect of this scenario in performance of a brand is more pronounced where the market demand is driven by price concerns.

From the perspective of economic factors, the selling economic environment for Dilmah Pure Ceylon tea brand is characterised by intensive competition and influx of various imported tea product brands from Sri Lanka and other parts of the world including East Africa, into the Australian market.

The influx of new tea product brands emanates from new importing organisations seeking to acquire part of the Dilmah Pure Ceylon tea brand’s market share in the Australian market.

Social factors act as an immense success factor for the Dilmah Pure Ceylon tea brand. Arambewela (2013, p.506) confirms that the marketing environment of Dilmah Pure Ceylon tea brand is affected by social factors when he states that the ‘advent of tea bags, green tea, and herbal tea products was a direct result of trends towards convenience and healthy lifestyles.

This trend has had a major impact on the marketing of tea in Australia’. In search of convenience, tea consumers also try other alternative products such as coffee. This aspect implies that the Dilmah Pure Ceylon tea brand faces major marketing challenge for ensuring customer loyalty to the product.

Managing a product delivered in the national market calls for the need of embracing technology in management of chain supplies and logistics. The Dilmah Pure Ceylon tea-brand management team handles large size of information relating to purchases, sales, and even the workforce data.

Fhe ever-changing technological developments and challenges of increased costs of learning business underscore yet a major challenge encountered in the Dilmah Pure Ceylon tea brand marketing environment. These challenges are articulated to the needs of keeping software application updated in an effort to ensure competitiveness in terms of effectiveness in handling all product-related information.

Dilmah Pure Ceylon tea brand embraces the use of tea bags as a means of packaging. This aspect creates the concern of environmental impacts of the brand in the manner of disposal of these bags.

Environmental concern for the Dilmah Pure Ceylon tea brand varieties is of great concern to the company especially given that Australia has policy frameworks to guide disposal of products and products’ associated wastes with the best practice being entirely environmentally green. Such legal provisions have the impact of increasing the costs of packaging of tea products. The tea bags used must be biodegradable.

Even though the above factors affecting the operation environment for any product are important, they are incomplete without discussing the competitive force in the market place. From the context of substitutes, the greatest threat for the Dilmah Pure Ceylon tea brand emanates from carbonated beverages coupled with coffee.

The main driver for consumption of these substitutes in comparison to tea mainly entails search for convenience coupled with search for variety (Arambewela 2013). This realisation suggests that the creation of a variety of the Dilmah Pure Ceylon tea brand to suit different consumer needs especially differing levels of convenience may help to reverse the consumption of alternative products in favour of tea.

Australia constitutes an attractive market for various tea brands. Arambewela (2013, p.506) supports this assertion by noting that Australia ‘is among the largest tea-consuming countries in the world, with per capita consumption of around 0.55 kilograms’. Table 1 below shows the extent and the degree of rivalry of competition of tea brands in the Australian market.

Table 1: competitions of tea brands in Australia

Source: (Arambewela 2013, p.506)

From the table above, AB foods coupled with Unilever constitute the major key multinational players in the Australian tea market. The two players account for 56 per cent of the total tea market share. This aspect means that other competing brands including the Dilmah Pure Ceylon tea brand battle to gain dominance for the remaining 44 per cent market share. Arguably, this aspect implies that the competitive market environment for the Dilmah Pure Ceylon tea brand in incredibly fragmented.

In comparison to the competing tea brands, the Dilmah Pure Ceylon tea brand has the advantage of higher brand value in relation to product-sales market volume. This aspect is evident as Arambewela (2013, p.506) notes that in the year 2010, ‘the grocery value of tea was estimated at $294.5 million, while the total volume stood at 11,184 tons’.

This value was accompanied by 2.3 per cent rise in the tea market value nationally and 2.1 per cent rise of tea sales volume. Although market share competition from various rival multinational organisations was immense, Dilmah acquired 14 per cent market share from the paradigms of market value and 12 per cent market share in the context of tea market volume. The aforementioned statistics suggest the existence of room to capitalise on positioning the Dilmah Pure Ceylon tea brand as a high-value quality tea product.

However, as argued before, the consumption trends of tea products are subject to social factors manifesting themselves in terms of changing lifestyles depending on demographic characteristics of consumers. This assertion implies that while attempting to position the Dilmah Pure Ceylon tea brand appropriately, focus on mechanisms of market segmentation is important to prevent the Dilmah Pure Ceylon tea brand loyal consumers from trying new alternatives to tea in the quest to satisfy their emerging lifestyles.

Market segmentation for Dilmah Ceylon Tea

For a firm to succeed in placing its brand strongly, it needs to determine its market segment precisely. Market segmentation encompasses division of consumers into subsets constituted by common needs in terms of consumption of goods and services offered for sale (Yelkur 2007). Figure 2 below shows various ways of segmenting a market

Fig 2: levels of segmentation

Source: (Yelkur 2007, p.107)

After segmentation, appropriate market campaigns are set to target the subsets. For the Dilmah Pure Ceylon tea brand, market segmentation can be accomplished in two main ways, viz. demographic segmentation, and psychographic segmentation. Demographics refer to the characteristics of people such as age, religion, gender/sex, and social class among others (Menon et al. 1999).

Psychographic segmentation is based on the reason why people buy products and services. According to Xiaoni and Prybutok (2008, p.9), ‘by creating psychographic profiles, marketers are in a position to understand the motivation and conscious drives of a target audience’. In terms of segmentation, psychographics encompass the people’s opinions and interests coupled with opinion variables. Pictures 1 below shows how psychographic segmentation may be accomplished

Picture 1: psychographic segmentation

Source: (Xiaoni & Prybutok 2008, p.9)

From the context of demographic segmentation, through new media, the Dilmah Pure Ceylon tea-brand target group is young people who are highly accessible to social media and Internet-based buying and selling systems. Studies show that people whose age falls between 10 and 45 years highly embrace the Internet (Maktoba, Ian & Sonny 2011).

This aspect means that such people are more likely to use the social media networks such as Facebook, Twitter, and MySpace among others. This group of people forms the main target subsets for marketing campaigns employing the benefits of the social media such as speed and cost-effectiveness in the promotion of brand or brand varieties.

The attitudes and interests of people for different products are dependent on various variables such as preferences. From the paradigms of psychographic segmentation, the target populations are the Australian people and other people from different nations residing in Australia.

These segments are divided into the middle class and working class persons. Offering products for sale at large retail shops such as supermarkets can be the most effective way of reaching out for the middle class and working class as such classes are likely to shop in supermarkets as opposed to small stores (Simon 2007).

While targeting this group of people, it is important to maintain high quality and value-driving forces for sale of the Dilmah Pure Ceylon tea brand varieties, since the middle class and the working class people are highly responsive to quality standards of products and services (Philport & Arbittier 2007). This assertion means that for success in restoring the early 1960s to 1970s dominance of the Ceylon tea in the Australian marketplace, an effective Dilmah Pure Ceylon tea brand positioning strategy is of great importance.

Brand positioning is enhanced through developing unique identifiers of an organisation so that when customers see the identifiers, the images of the products and services offered by the organisation are invoked. Customers not only buy a product or pay for a service, but also they pay for the brand image (Holt & Quelch 2004).

According to Keller (1998, p.27), brand image is a ‘perception of customers when they see a brand and reflected by brand associations in their mind’. This aspect implies that brand positioning refers to the manner in which an organisation wants its customers to think about its products or services. Ceylon tea is not a new brand in Australia (Arambewela 2013); hence, great efforts are required to ensure that the target market segments are aware of the continued quality presence of the Ceylon tea in the Dilmah Pure Ceylon tea brand.

For an organisation to penetrate the target markets effectively, it requires to differentiate its brand from all other brand of the competitors. Brand differentiation refers to the unique symbols or any other means of identifying and distinguishing an organisation from other organisations even though two or more organisations offer similar products or services (Hill & Ettenson 2005). Organisations not only sell products or charge for their services, they also sell their brands.

A number of elements including the brand name, logo sounds, tagline, tastes, and scents among others identify brands. Dilmah should deploy a unique logo in the Australian market in an attempt to make the target market perceive it as uniquely offering tea product varieties. Slogans such as ‘I like Dilmah Pure Ceylon tea brand experience’ can incredibly aid in soliciting for happy thoughts amongst customers whenever they see Dilmah Pure Ceylon tea advert or even get the urge to take tea.

Management of the marketing mix variables for Dilmah Ceylon Tea brand

Marketing mix embraces various choices that organisations make to ensure that their products or services are availed to the market (place) at the right price using the appropriate promotional strategies (Menon et al. 1999). Marketing mix for the Dilmah Pure Ceylon tea brand encompasses four mains aspects, which include place, price, promotion, and the product.

Place

The place of sale of the product is in all supermarkets, hypermarkets chain stores, and even in local stores across Australia. This place is justified by the view that marketing of the Dilmah Pure Ceylon tea targets people of all social economic status. This aspect makes it possible to place the Dilmah Pure Ceylon tea.

Failure to offer the product at all the places where the Dilmah presence is felt is tantamount to breach of a strong brand positioning strategy pursued in the Australian tea market. In a place of sale, brand needs to present good features (Rust, Zeithaml & Lemon 2008). For instance, the brand should be appealing to the target market segments.

Product

The product offered for sale is the Dilmah Pure Ceylon tea and its brand. In Australia, Dilmah presents a collection of product varieties represented by the brand of the Dilmah. Arambewela (2013, p.507) notes that these product varieties range from ‘gourmet black tea, original gardens teas, green tea, decaffeinated tea, real white tea, organic tea, and real chai to a variety of herbal infusions’.

Hence, the success of the Dilmah brand in the new market is a measure of the success of the Dilmah Pure Ceylon tea. Ensuring that customers are connected and maintained requires the creation of a dialogue that is sensible with the customers. Holt and Quelch (2004, p.73) posit, ‘the importance of brand in a business strategy affirms a paradigm of calculating its economic value called brand equity’.

Brand equity entails a long-term investment that Dilmah has to manage effectively since it is the measure of economic value for a company. Without effective management of the brand equity for Dilmah, it is practically impossible to gain optimal profitability for the new Ceylon tea brand, viz. Dilmah Pure Ceylon tea.

Pricing strategy

Price is an important aspect for recapturing the 1960s to 1970s’ market share for the Ceylon tea brand in the Australian tea market. Since some multinational companies have been in a position to acquire some of the Ceylon tea brand’s market share through low pricing strategy, it is important for Dilmah to consider the possibility of deploying low-price strategy to re-penetrate the tea market.

However, Khosla (2010, p.220) warns that while employing this strategy, it is crucial to note that the ‘price of a product involves the examination of customers’ perceptions and rival products and the costs of manufacture’. The price of a product is set such that an organisation is in a position to cover its direct and indirect costs and earn a profit margin.

Price for the products offered by the Dilmah tea product in the Australian market should be set such that the target market population will buy large enough number of products for the company to make a significant profit margin that would make it break even and deliver value to its investors.

Promotional strategy

People share information on the experiences of consuming various products through various forms of media especially the Internet and social media.

Consequently, these platforms form some of the promotional media that the Dilmah should prioritise. In essence, through the social media and the Internet, it is possible to reach a large number of people globally with minimal expenditure of financial resources (Abhamid & McGrath 2005). Customers themselves share promotional information. Point of sale promotion is also an additional cost-effective promotional technique.

Incidences of negative profiling of the Dilmah Pure Ceylon tea brand varieties may be spread through the social media and the Internet. This aspect implies that in an effort to build a strong brand in Australia that will overcome the brand positioning challenges in the future, the Internet and the social media form important promotional platforms. Multinational organisations offer cheap tea brands developed from tea produced in Sri Lanka and other places.

Pursuing low pricing strategy to compete effectively with the multinational organisations requires Dilmah to minimise costs. Apart from the limited use of traditional media such as newspapers and magazines coupled audio and audio visuals to alert people about the renewed brand of Ceylon tea in the Australian market, point of sale promotion is also incredible in retaining new and existing customers.

Conclusion

A major critical mechanism of inducing increased consumption of an organisation’s brand entails the development of customer satisfaction and loyalty to the brand through designing of an appropriate product marketing mix. Since this goal is unrealisable without prior knowledge of the marketing environment, this paper first discussed the nature of the marketing environment for Dilmah Pure Ceylon tea before progressing to offer a discussion of the product marketing mix of the Dilmah Ceylon tea brand.

The paper also argued that incorporation of brand in the design of marketing planning for the Dilmah Pure Ceylon tea brand is crucial since brand identifies and distinguishes an organisation from other organisations even though two or more organisations offer similar products or services.

Appendix 1: primary exports for Sri Lanka between 1965 and 1998: percentage composition at current prices, two-year averages

Source: Herath (2004, p.3)

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