Lipton Report

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a study on the trade activities of lipton Pakistan and the success, trade marketing related topics are covered in details

Transcript of Lipton Report

Reviewing Lipton Yellow Label Trade Marketing Channels

Submitted To:Mr. Mubin Jaliawala

Group Members:Muhammad Usman Badar 1235167Sabeen Khan 1166119

Executive Summary

This project is about the gauging the performance of Lipton Tea Pakistan on trade channels. In the this report we have analyzed the current state of the Lipton on the retail stores & how its retail performance is leading the change in brand standing in the market

In adding to the analyzing part we have made a trade marketing plan for Lipton for the year 2013. In which we have suggested the way forward for the brand to regain its position in the market.

Category Introduction:

Thought tea the 3rth largest consumed beverage of the world, but in Pakistan the category is not only considered as a beverage anymore, tea as a category has been an integral part of Pakistan culture. Each day the category is consumed in almost 100% of Pakistan (25 Million Households with an average family size of 7 people). The most often consumed occasions for the category are breakfast & tea serving in evening.

Tea is a seasonal category with minimum sales of 10,793 tons per month to maximum sales of 12,901 tons. The category sales start to increase in winter months starting from (September to January), on an average 42% of the category yearly volumes are purchased within the time span of 5 months). Whereas as moving towards off season (summers) the category sales did not declined significantly as tea is considers as daily consumed beverage among the households of Pakistan.

The category turnover is around 140,000 tons per year among the households of Pakistan, in which around 75% of the market share in owned by Branded Tea and 25% is Loose Tea. Each month an average household purchases around 480 gram of tea.

Within branded tea segment, major competition is among three players Unilever Pakistan Tapal Tea Eastern Foods

Brand Portfolio of three major players

S.NoUnilever BrandsTapal brandsEastern Foods Brands

1Lipton Yellow labelTapal DanedarVital Tea

2SupremeTapal FamilyMixtureSurhan

3A1 Karak ChaiTapalTez Dum

4Pearl DustTapalChenal Dust

Among top three players the competition is very tough between Unilever & Tapal, whereas Eastern food on the other hand is gaining share in the market through both of its brands Vital & Surhan. Through catering the rural markets and lower SEC groups in urban area of Pakistan.

Introduction to Lipton

At current stage Lipton own 6% volume share in the total tea category, whereas each month almost 10% of the Pakistani household use the brand on the monthly basis (indicative brand incidence). With an average purchases of 300 gms of Lipton tea. Among Lipton brand households, brand own 69% share of the total category purchases reflecting high level of exclusivity towards the brand among it user households and rest 31% of the category purchases by Lipton user households are owned by competition brands ( brands used in conjunction with Lipton Tea with in tea category)

Positioning:

Lipton is one of the worlds greatest refreshment brands. Its the worlds best-selling tea brand, has been established for more than 100 years, and is available in more than 100 countries.

Position their product as High quality High price Great aroma New taste Exciting and refreshing

Positioning Statement:A sip of Inspiration

Target Audience:

Lipton has basically positioned itself as a brand catering the needs of SEC groups A & B. The brand is basically targeting the urban areas and hasconcentrated on the upper and middle classes. Lipton as a product is present in a different packaging & formats. Teabags are targeted towards the organizations, while soft packs and jar packsare targeted towards home usage. In terms of age and occupation the brand is mainly targeting age below 35 years (mainly towards the working class of Pakistan)

Offering:

Lipton tea is available in different variants Black tea Green Tea Flavored Tea

Whereas Black & Green are available for the local consumers, while flavored tea is only available for the offices (very small portion of the total brand) USP:

Enhances Tea Essence Rich Taste

SKU Offering:

On retail channel Lipton in available in following SKUs 27 Gms 95 Gms 190 Gms 475 Gms 950 Gms Tea Bags packs in (50, 100 & 300 tea bags range)

SKU Wise Pricing:

27 Gms / Rs. 20 (Average Price) 95 Gms / Rs. 73 (Average Price) 190 Gms / Rs. 132 (Average Price) 475 Gms / Rs. 331 (Average Price) 950 Gms / Rs. 630 (Average Price) Tea Bags packs in (50, 100 & 300 tea bags range) ( Very Small Contribution to Total Lipton Sales among the Households of Pakistan)

SKU Pricing & Trade Margins:

The details of Distribution & Retail margins are very much confidential to the Business. The only margin number they are comfortable in sharing is the overall trade margin that is almost same for the whole SKU range.

27 Gms / Rs. 20 (Average Price) 7 %Total Trade Margin95 Gms / Rs. 73 (Average Price) 190 Gms / Rs. 132 (Average Price) 475 Gms / Rs. 331 (Average Price) 950 Gms / Rs. 630 (Average Price) Tea Bags packs in (50, 100 & 300 tea bags range)

Fast / Slow Moving SKUs:

190 Gms & 475 Gms (Jar / Pouch) of black tea are the fastest selling SKUs; following are the SKU position in terms of sales contribution.

1. 190 Gms ( Contributing 33% of sales)2. 475 Gms ( Contributing 25% of Sales)3. 95 Gms ( Contributing 15% of sales)4. 950 Gms ( Contributing 12% of sales)5. 27 Gms ( Contributing 4% of sales) 6. Tea Bags ( Contributing 11% of sales)

Competitive Analysis

Tea is a seasonal category with fierce competition; the category is majorly divided among three players

Branded Segment Mushroom Players ( Small tea brands) Loose tea

Branded segment is the most dominant segment with high competition among two players Unilever & Tapal Tea, whereas over the period small players like Eastern Foods are also catching up with its brand Vital Tea & Surhan Tea. Among branded segment Tapal dominates the urban markets with its brands Tapal Danedar and Family Mixture, whereas for Unilever the only brand whose volumes are urban skewed is Lipton Tea driving most of its volumes from Karachi and Islamabad City. For rural markets Tapal is offering Tapal Tez Dum &Tapal Chenak Dust, while Unilever Brook Bond Supreme is national brand having a good presence across the Pakistan. Unilever is catering rural markets through Pearl Dust & A1 karak chai.

Being a FMCG category presence on retail channel is essential, as non-availability of the brand might lead to brand switching. Among beverage categories brand switching due to non-availability could result in permanent loss of customer base

Tapal tea is the toughest competitor on retail channel, one positive thing that Tapal have over Lipton is its Loose Credit Sales Policy. Retailers have the leverage to pay back in the time period of one month. Whereas for Unilever retailers are bound to pay back within 3 days of purchases

Further with its loose credit sales policy Tapal is offering wide range of gifts to retailers, if they buy certain amount of cartons, whereas Lipton on the other hand providing discounts of per carton purchases.

SWOT Analysis of Lipton:

STRENGTHS:

Unilever is a multinational company Powerful heritage of Lipton as present in the Pakistan market since 1948 Familiar with psychographics and demographics of the local consumers Strong brand image and brand awareness in Pakistan Market leader as it has a 8% market share in branded tea. Larger sales force Strong and long-term relationship with distributors, wholesalers and retailers. Sound and experienced management. Excellent marketing department assisted by a highly regarded marketing research unit.WEAKNESSES:

Poor pricing strategy leading the volume share loss in Q4 2014 Low brand awareness to trial ratio Only catering the urban Pakistan Level of cannibalization with its own brand Lipton Mega Dane

OPPORTUNITIES:

focus towards the youth Rising literacy Decline in government taxes to the tea imports leading to room for increase in profit margins

THREATS:

Threat from cheaper tea smuggled into the country via border areas of KPK and Baluchistan seriously affecting Levers sales and earnings. Possible increase of Tapal and loose tea market shares Rising inflation, which reduces disposable income of consumers Increasing import duties since a lot of raw materials are imported would raise the price of its end products. Liptons profit margin is exposed to rupee devaluation.

Trade Marketing Activities in 2012

Generally retailers earn rupees 3 on purchasing a carton of Lipton Tea, but in last 12 months Unilever comes with a massive trade campaign, that they called Mega Trade Campaign giving 20 Rupees Off to retailers on the purchase of one carton.

This Mega Trade campaign was initiated to counter its rival Tapal on trade channel that have developed a reward program on the purchases of certain number of cartons. There gifts are as follows

Motor Cycles Free trips Different gift as per the level of purchases

To counter Tapal, Unilever initiated Mega Trade Campaign to give incentive to retailers on the purchase of each carton. This trade campaign increased the level of Trust on Unilever brand Lipton. Through this strategy Unilever minimizes the Risk associated to retailers on purchases high quantities of the brand.

Trade Channel Importance:

Hyper Star, Imtiaz &Metro are the direct consumers of Unilever Beverages. Unilever serves them directly for Lipton through their ware house.

Other than that focus is on the following channels through distributers1. Big General Stores ( highly focused)2. Kiryana Stores3. IMT & LMT

Geographic Presence of Lipton:

Following are the areas that contribute majority of Lipton sales volumes Lahore Islamabad Jhelum Central Punjab

Number of shops Covered:

Around 100,000 shops are covered directly through distributers and then the sales volumes are carried forward for indirect services (Shops in small towns & very less number of shops in rural areas)

Retail Channel Classification:

Global Norms AC Nielsen definition is followed for trade channel classification

Phase 2 - 2013 Objective strategy & Action Plan:

Till 2012, Unilever Beverages have charged premium prices from the customers. As it is not carrying forward the decline in taxes by the government on tea imports to the end consumer, where as its competition Tapal have reduced its prices instantly after the decline in government taxes leads to increase in purchases for its brands. In 1st quarter 2013, all brands of Unilever tea faced decline in volume share due to its non-responsiveness to the cost changes

After encountering decline in level of sales for of its brands, Unilever starts giving discount offer on its brand Lipton & Supreme Tea.

Since quarter 2 2013, Lipton is available at discounted prices (Reflective via recent Discount Campaign for Lipton Tea)

The major objectives & action plan for 2013 are as follows for Lipton Tea:

1. Recapture the Lost Share in the Market (by giving discounts) 2. Increase brand consumer base by giving discounts on its trail generating packs 3. Increase the Lipton share among Lipton tea existing consumer base ( Dominating the category purchases of its users)

Trade Campaign 2013:

We have selected all the SKUs under the Channel of General Trade, General/Modern Trade and Modern Trade. The colors that we have chosen are Yellow, Green & Purple.

Yellow represents Extra Free campaign Green represents Discount campaign Purple represents Lucky Draw campaign

Lipton Trade Promotion Plan 2013

SKUChannelJanFebMarAprMayJunJulAugSepOctNovDec

27 GmsGT

95 GmsGT

190 GmsGT+MT

475 GmsGT+MT

950 gmsMT

Tea BagsMT

Scale

General Trade

Lipton Trade Promotion Plan 2013 (SKU 27,95 & 950 Gms)

Promotional ItemsJanFebMarAprMayJunJulAugSepOctNovDec

Posters56250007500000

Buntings33750004500000

Lipton General Trade Costing 2013 (SKU 27,95 & 950 Gms) Jan to Mar

Promotional itemCost/UnitInsertionsNumber of ShopsShops CoveredCost

Posters253100000750005625000

Buntings153100000750003375000

Lipton General Trade Costing 2013 (SKU 27,95 & 950 Gms) May to Aug

Promotional itemCost/UnitInsertionsNumber of ShopsShops CoveredCost

Posters254100000750007500000

Buntings154100000750004500000

Lipton General Trade Costing 2013 - Total

Promotional itemCost/UnitInsertionsNumber of ShopsShops CoveredCost

Posters2571000007500013125000

Buntings157100000750007875000

Total21000000

Scale

Modern Trade

Lipton Trade Promotion Plan 2013 (SKU 190,475 & Tea Bags)

Promotional ItemsJanFebMarAprMayJunJulAugSepOctNovDec

Buntings3000

Wobblers10000

OCD1500000

Lipton Modern Trade Costing 2013 (SKU 190 &475 Gms) May to Aug

Promotional itemCost/UnitInsertionsNumber of ShopsShops CoveredCost

Buntings15450503000

Lipton Modern Trade Costing 2013 (Tea Bags) Oct to Dec

Promotional itemCost/UnitInsertionsNumber of ShopsShops CoveredCost

Woobler504505010000

OCD30000150501500000

Lipton Modern Trade Costing 2013 - Total

Promotional itemCost/UnitInsertionsNumber of ShopsShops CoveredCost

Buntings15450503000

Woobler504505010000

OCD30000150501500000

Total1513000

Scale

Total Cost

Lipton General Trade Costing 2013 - Total

Promotional itemCost/UnitInsertionsNumber of ShopsShops CoveredCost

Posters2571000007500013125000

Buntings157100000750007875000

Total21000000

Lipton Modern Trade Costing 2013 - Total

Promotional itemCost/UnitInsertionsNumber of ShopsShops CoveredCost

Buntings15450503000

Woobler504505010000

OCD30000150501500000

Total1513000

Lipton Trade Promotion Costing 2013 - Total

22513000

Thank You