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Business Strategy of Unilever (Lipton)

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Business Strategy of Unilever (Lipton)

  1. 1. Final Project Course: Business Strategy & Policy
  2. 2. Learning Objectives  Introduction  History of Lipton (Unilever)  Vision, Mission, Strategies, Objectives  Analysis  Matching Stage  EFE Matrix  IFE Matrix  SWOT Matrix  BCG Matrix  Advantages/Disadvantages of alternative Strategies  Recommended Strategies & Long term objectives  Recommended Annual objectives & Polices  Strategy Review & Evaluation  Conclusion
  3. 3. Unilever’s Vision Existing To create a better future every day. We help people feel good, look good and get more out of life with brands and services that are good for them and good for others New To be the paramount across the whole globe to become the part of each and every moment of life by bringing sustainability in growth, novelty in products and services; from food, beverages to home & personal care.
  4. 4. Unilever’s Mission Existing To meet the everyday needs of all consumers everywhere for nutrition hygiene and personal care through branded products and services that delivers the best quality and value. New To provide a better future to our planet by working on social responsibility and protecting our environment in our every segment ranging from food, beverages to home and personal care products and services.
  5. 5. History of Lipton Tea  Established in 1893 as Thomas J Lipton Co  Acquired by Unilever in the year 1972.  Launched in Pakistan in 1948  Leading tea brand in the world  More than 11 major varieties of Lipton in Pakistan
  6. 6. Brands
  7. 7. PRODUC T • Lipton Yellow label • Lipton mega danne • Lipton green tea • Lipton flavored tea • Lipton iced tea • Lipton tea bags PRICE • PREMIUM PRICING STRATEGY: to encourage favorable perceptions among buyers • VALUE BASED PRICING STRATEGY: value for the customer and not production cost PLACE • All across Pakistan • Urban/Rural Areas • e.g. HKB, Hyperstar, small retail stores PROMOTI ON • Advertisemen t (TV, Newspaper, Magazines, Billboards, POS etc) • Sales Promotions (Lucky draws, discounts) • Internet Marketing • Sponsorships • Co-Branding 4Ps
  8. 8. PRODUCTS GEOGRAPHICA L BEHAVIORA L PSYCHOGR APHIC DEMOGRA PHIC Yellow Label All major cities Active enthusiasts A+, A/B+, B 15 years & above M/F Green tea All major cities Health conscious A+, A 20 to 40 years M/F Iced tea ----- Cool Kids Youngsters A+, A 10 to 32 years M/F Flavored tea All major cities Flavor cravers A+, A/B+ 10 to 32 years M/F Tea bags All major cities Non-Burger lovers A+, A 15 years & above M/F Legends: A+ UPPER CLASS A UPPER –MIDDLE CLASS B+ MIDDLE CLASS B MIDDLE-LOWER CLASS Segmentation
  9. 9. Rivalry (High) Power of Suppliers (High) Threat of Substitutes (High) Power of Buyers (Moderate) Barriers to entry (High) Porter Analysis
  10. 10. LIPTON TAPAL Brook Bond PSYCHO- ANALYSIS Health caring Adventurous Active Young Vibrant Energetic Focuses on aroma and taste Establishes strong family bonds Rich taste and flavor Unique aroma Good packaging Good advertising Brand visibility TARGET MARKET All age group except children Upper and middle social class Urban Areas All age group except children All social classes Urban as well as rural area people All age group except children Also rural area people All social classes Urban as well as rural area people MARKET POSITIONIN G High quality Premium price Strong Aroma Excellent taste Adventurous Rich taste and flavor 1-1 competitor of Lipton Strong aroma and Rich taste and flavor Unique aroma Good packaging Good advertising Competitor Analysis
  11. 11. LIPTON TAPAL Brook Bond PRICE High priced focusing on middle and elite class Medium Price Medium Price STRATEGIE S Market development Product Development Cost leadership Economies of scale Low cost strategy Product development Market development Forward integration strategy RND STRATEGY Differentiation Innovation Innovation They have less focus on RND as compared to the other two SNOW AND MILES TYPOLOGI ES Prospector As it is innovative, growth oriented, searches for new markets and new growth opportunities, Analyzer Tapal maintains its current markets and current customer satisfaction with Defender Brooke bond protects current markets and maintains even Competitor Analysis
  12. 12. 43% 41% 8% 6% 2% Sales Lipton Tapal Vital Tea Tetley Others Market Share
  13. 13. T H R E AT S High prices Smuggling of loose tea Substitutes Rise in International tea prices Tapal’s indh & Baluchistan Market share O P P O R T U N I T I E S Reducing costs Producing Out of Home Advertisement Signing contracts with Commercial sectors Reduction in Import duty W E A K N E S S E S High prices Distribution Network Out-of-Home (OOH) Advertising S T R E N G T H S Quality Management Brand Recognition Brand Image Financial Position Customer Loyalty Quality and Variety Distribution and Advertising
  14. 14. Matching Stage EFE Matrix
  15. 15. Key External Factors Weight Rating Weighte d Score Opportunities 1 Reducing costs: Instead of importing from other countries, it is preferable to import from India and Srilanka at cheaper cost 0.08 4 0.32 2 Producing: Set up farms for cultivation instead of importing, which further reduces input costs 0.11 2 0.22 3 Out of Home advertisement can be used to enhance sales in Sindh and Baluchistan 0.09 1 0.09 4 Have opportunity to sign contracts with commercial sector i.e. universities, restaurants ,offices etc. 0.09 3 0.27 5 reduction in tariff and custom( import duty reduced from 10% to 5%, sales tax 17% to 6%) in the recent of 2015 gives great opportunity of increasing sales 0.14 4 0.56 Total Weight 0.51 Threats 6 Threats of New Entrants: Due to cheaper tea imports from Sri Lanka and India, new players are likely to enter the industry. 0.09 4 0.36 7 Smuggling: Increased smuggling of loose tea at cheaper rates. 0.08 3 0.24 8 Substitutes: Better quality and taste of juices and soft drinks 0.08 4 0.32 9 Rise in International tea prices: Due to popularity tea prices have been increased internationally. 0.05 3 0.15 10 People thinking is changing about tea usage 0.07 4 0.28 11 High Market share of Loose tea and Tapal in Sindh and Baluchistan 0.06 1 0.06 12 Long summer season affect the sale of tea 0.06 3 0.18 Total Weight 0.49 Total Weight of Opportunities and Threats 1 3.05
  16. 16. IFE Matrix
  17. 17. Key Internal Factors Weight Rating Weighted Score Strengths 1 Experience and Quality Management: Excels its commitment to matching the quality of Lipton tea with excellent manufacturing practice. 0.1 4 0.4 2 Brand Recognition: Lipton is a strong brand name, has strong dominance in the market and maximum shareholding overall and 54% market share 0.08 4 0.32 3 Customer Preferences: Lipton focuses on its target audience, keeping in mind the taste and preference of market segment. 0.09 3 0.27 4 Financial Position: Lipton has gained great profit throughout its run and still continues to do so through International exports. 0.1 3 0.3 5 Customer Loyalty: Most loyal customers of Lipton prefer using Yellow Label because it has a sense of trust and commitment in terms of taste. 0.1 3 0.3 Advertisement : It has strong advertising campaigns focusing on health and inspiration 0.04 4 0.16 6 Diversification: It has an integrated production process and is highly innovative. 0.07 3 0.21 7 Distribution : It has a strong distribution network in Punjab with respect to others provinces of Pakistan 0.09 4 0.36 8 Packaging: Attractive packaging as well as gifts i.e. Lipton printed caps, cups, shirts etc. 0.05 3 0.15 9 Out-of- Home (OOH) Advertising 0.05 2 0.1 10 It has a strong advertising campaigns focusing on health and inspiration 0.04 3 0.12 Total Weight 0.81 Weaknesses 10 High prices: Since it is a market leader and offers a premium brand, it sets the price in the market and charges high price. 0.04 2 0.08 11 Some products like Green tea and flavored tea needs more promotional campaigns. 0.05 3 0.15 12 Distribution: Distribution network is relatively weaker in NWFP,Sindh and Baluchistan as consumers there still prefer local teas over branded ones. 0.1 1 0.1 Total Weight 0.19
  18. 18. SWOT Matrix
  19. 19. Strengths 1. Experience and Quality Management: Excels its commitment to matching the quality of Lipton tea with excellent manufacturing practice. 2. Brand Recognition: Lipton is a strong brand name, has strong dominance in the market and maximum shareholding overall and 54% market share 3. Customer Preferences: Lipton focuses on its target audience, keeping in mind the taste and preference of market segmentation 4. Financial Position: Lipton has gained great profit throughout its run and still continues to do so through International exports. 5. Customer Loyalty: Most loyal customers of Lipton prefer using Yellow Label because it has a sense of trust and commitment in terms of taste. 6. Diversification: It has an integrated production process and is highly innovative. 7. Distribution: It has a strong distribution network in Punjab with respect to others provinces of Pakistan 8. Packaging: Attractive packaging as well as gifts i.e. Lipton printed caps, cups, shirts etc. 9. Out-of- Home (OOH) Advertising 10. It has a strong advertising campaigns focusing on health and inspiration Opportunities 1. Reducing costs: Instead of importing from other countries, it is preferable to import from India and Srilanka at cheaper cost 1. Producing: Set up farms for cultivation instead of importing, which further reduces input costs 1. Out of Home advertisement can be used to enhance sales in Sindh and Baluchistan 1. Have opportunity to sign contracts with commercial sector i.e. universities, restaurants, offices etc. 1. Reduction in tariffs and custom (import duty reduced from 10% to 5%, sales tax 17% to 6%) in the recent of 2015 gives great opportunity of increasing sales. SO (S4-O1) Financial position can be increased by importing raw material at low cost from India and Srilanka (S7-O4) Lipton has strong distribution network and advertisement through which it can expand Sindh and Baluchistan market (S7-06) By increasing the distribution network, multiple restaurants, universities and commercial sector to gain further market share. (S10-O4) Lipton has strong advertisement network through which it can expand Sindh and Baluchistan market (Strength-Opportunities)
  20. 20. (Weakness-Opportunities) Weaknesses 1. High prices: Since it is a market leader and offers a premium brand, it sets the price in the market and charges high price. 1. High prices: Since it is a market leader and offers a premium brand, it sets the price in the market and charges high price. 1. Distribution: Distribution network is relatively weaker in NWFP, Sindh and Baluchistan as consumers there still prefer local tea over branded ones. Opportunities 1. Reducing costs: Instead of importing from other countries, it is preferable to import from India and Srilanka at cheaper cost 1. Producing: Set up farms for cultivation instead of importing, which further reduces input costs 1. Out of Home advertisement can be used to enhance sales in Sindh and Baluchistan 1. Have opportunity to sign contracts with commercial sector i.e. universities, restaurants, offices etc. 1. Reduction in tariffs and custom (import duty reduced from 10% to 5%, sales tax 17% to 6%) in the recent of 2015 gives WO (W2-04) Lipton’s distribution network is weaker in some of the provinces by improving their distribution networks it can expand market share in NWFP, Sindh and Baluchistan. (W1-O2) Lipton can gain more profit margins by starting in home production as in Pakistan some farmers started their own cultivation of tea. (W2-O4) Green tea is highly demanded in these days and by doing out of home advertisement it can gain more market share from this segment.
  21. 21. (Strengths-Threats) 1. Experience and Quality Management: Excels its commitment to matching the quality of Lipton tea with excellent manufacturing practice. 2. Brand Recognition: Lipton is a strong brand name, has strong dominance in the market and maximum shareholding overall and 54% market share 3. Customer Preferences: Lipton focuses on its target audience, keeping in mind the taste and preference of market segmentation 4. Financial Position: Lipton has gained great profit throughout its run and still continues to do so through International exports. 5. Customer Loyalty: Most loyal customers of Lipton prefer using Yellow Label because it has a sense of trust and commitment in terms of taste. 6. Diversification: It has an integrated production process and is highly innovative. 7. Distribution: It has a strong distribution network in Punjab with respect to others provinces of Pakistan 8. Packaging: Attractive packaging as well as gifts i.e. Lipton printed caps, cups, shirts etc. 9. Out-of- Home (OOH) Advertising 10. It has a strong advertising campaigns focusing on health and inspiration Strengths Threats 1. Threats of New Entrants: Due to cheaper tea imports from Sri Lanka and India, new players are likely to enter the industry. 2. Smuggling: Increased smuggling of loose tea at cheaper rates. 3. Substitutes: Better quality and taste of juices and soft drinks 4. Rise in International tea prices: Due to popularity tea prices have been increased internationally. 5. People thinking is changing about tea usage 6. High Market share of loose tea and Tapal in Sindh and Baluchistan 7. Long summer season affect the sale of tea ST S1-T1 Lipton caters this threat by maintaining strong brand name , image and brand loyalty S6-T3 With its diverse product lines, it can overcome this threat by offering iced tea and flavor tea. S10-T5 Although people preferences about tea are changing but Lipton is working in its Ads to change consumer psychology (S7-T6-T7) By creating strong distribution network, Lipton can capture market share of Tapal and loose tea
  22. 22. (Weaknesses-Threats) Weaknesses 1. High prices: Since it is a market leader and offers a premium brand, it sets the price in the market and charges high price. 1. Some products like Green tea and flavored tea needs more promotional campaigns. WT (W2-T3), (W2-T6) By overcoming the promotional weaknesses of flavored tea Lipton can compete with its substitutes (W1-T1) By slightly reducing their tea prices or providing good offers threat of new players in the market can be minimized that might influence their market share. 1. Distribution: Distribution network is relatively weaker in NWFP, Sindh and Baluchistan as consumers there still prefer local teas over branded ones. Threats 1. Threats of New Entrants: Due to cheaper tea imports from Sri Lanka and India, new players are likely to enter the industry. 2. Smuggling: Increased smuggling of loose tea at cheaper rates. 3. Substitutes: Better quality and taste of juices and soft drinks 4. Rise in International tea prices: Due to popularity tea prices have been increased internationally. 5. People thinking is changing about tea usage 6. High Market share of loose tea and Tapal in Sindh and Baluchistan 7. Long summer season affect the sale of tea
  23. 23. BCG Matrix
  24. 24. Advantages  Farmers started cultivation of tea in their farms in Pakistan. This will safe cost of imports  Large demand can be met Disadvantages  Required High investment in farming plants  Quality factor can be affected Strategy : (In Home Production Strategy) Advantages & Disadvantages of Alternative Strategies
  25. 25. Market Development Strategy for Flavored & iced tea: Advantages  Increase in sales in summer  Increase the usage of Iced Tea Disadvantages  Increase Advertisement Cost  Increase Distribution Cost Marketing Penetration strategy (other than Punjab): Advantages  Get market share in other provinces too.  Cobranding with sugar, milk and biscuits will increase its sale Disadvantages  Increase Cost of Promotion StrategiesStrategies
  26. 26. Iced Tea Join venture with PepsiCo: Advantages  Lipton can use Pepsi Distributors Disadvantages  Collaboration between the department can be affected due to conflicts Strategies Market Penetration of Tea Dust against Tapal: Advantages  Capture market of strong tea users Disadvantages  Lipton yellow label usage can be affected
  27. 27. Product Development of Lipton Darjeeling: Advantages  Can capture the market of Baluchistan Disadvantages  No as such Strategies Lipton Mixture Tea: Advantages:  Lipton mix tea can give an advantage over other competitors.
  28. 28. Recommended Long Term Objectives:  Capture tea market of Sindh( Market Penetration)  Own Tea Production Plant in Pakistan( Backward integration)  Change consumer preferences about tea  Lipton Iced tea revival (Joint venture with PepsiCo.)  Signing MOU’s with as much commercial sector, restaurants and universities. Recommended Strategies:  Improve distribution of tea in Sindh  Improve advertisement & promotional campaigns according to the need of Sindh consumers  Increase sales of Lipton Iced tea  Increase sales of Green tea  Co-branding: with milk and candy biscuit, free sugar etc. Recommended Strategies & Long Term Objectives
  29. 29.  Intense distribution  Different promotion strategies to cater different markets.  Lipton yellow label should reduce its prices in order to become a more affordable brand  Lipton yellow label should increase the use of tea vending machines to all the major cities in Pakistan.  Lipton should introduce its internationally recognized ice tea in Pakistan first on an experimental basis Annual Objectives
  30. 30. Actual Strategies Recommended Strategies Not working on new product with Tapal Working on new strong Lipton brand in Pakistan Minimum advertisement & sales for Lipton Iced Tea Enhance advertisement & sales of Lipton Iced Tea Minimum advertisement for Lipton Green Tea Enhance advertisement of Lipton Green Tea Minimum distribution of Lipton Green Tea Increase distribution of Lipton Green Tea Comparison of Recommendations to Actual Strategies
  31. 31. Strategies Cost (Rs) Annual Objectives Cost (Rs) Distribution of tea in Sindh 10 Million Own Tea production in Pakistan 20 Million Advertisement & promotional campaigns 2.5 Million Capture Tea market of Sindh 7 Million Contract with Retailers in Sindh 7 Million Joint venture with PepsiCo 15 Million Contract with Distributor in Sindh 5 Million Signing MOU’s with restaurants & Universities 14 Million Co-branding with milk & candy biscuit etc. 6 Million Change consumer preference about tea in Sindh, NWFP and Baluchistan 12 Million Cost of Specific Strategies and Annual objectives
  32. 32. Cost of Farming Initial Four Year Investment per Acre Rs.170,000/- Production Per Acre 1200 kg Area of Cultivation Mansahra and Swat Cost of fertilizers Rs.12000/- Cost of weeding 3210 Cost of tipping 1575 Overhead Cost 5000 Total Cost Rs.200,000/acre/ann um Total Sales: 60 Million per annum Other Costs: Lipton Mixture Tea Products 60 Grams 120 Grams Sachets Production 25% 25% 50% Kg 200,000 50,000 50,000
  33. 33. Recommended Strategies Implementation Expected Results Improve distribution of tea in Sindh Signing contracts with as many distributors as possible Market share will be captured in Sindh market Improve advertisement & promotional campaigns for Sindh consumers Sponsorships, TV ads & bill board advertisements. It helps to increase sales in Sindh Increase sales of Lipton Iced tea Door to door sales & point of sales in stores Overcome substitute Increase sales of Green tea Promotional campaigns for creating awareness of green tea Increase in awareness of green tea in overall market Co-branding: with milk and candy biscuit, free sugar etc. New packaging design and offerings Usage rate will be increased Implementation & Expected results for recommended strategies
  34. 34. Desired Situation:  50 % market share Lipton share of Pakistan by launching new “Lipton Mixture Tea” according to the strong taste required of consumers in competition of Tapal Current Situation:  85% of Upper and Middle Class is captured by Lipton.  Lipton has high share in Punjab.  Lipton Tea Advertisement is lacking attraction  95% of Lower Middle and Lower Class is captured by Tapal. Tapal has high share in Sindh % Baluchistan  Tapal is successfully attracting the market with its TVC
  35. 35. Company Strategy  To double the size of the business whilst reducing environmental footprint and increasing positive social impact  Unilever aims to expand its business more by doubling its sales. Supporting Policies  Increase distribution and advertisement  Launch new Lipton Mixture brands  Bring prices of products close to the competitors  Support cultural activities in the country Recommended Polices
  36. 36. Divisional Objective  Lipton market penetration in Sindh and Baluchistan  Increasing rare and expensive raw material  Collaboration with our employees Supporting Policies:  Strong relationship with distributors and retailers.  Training to farmers about tea plantation  Financial support to the farmers Con’t
  37. 37. Production Department Objective  Most consolidated packaging and less wastage Supporting Policies:  Less water usage  Reduction in Greenhouse Gases Con’t
  38. 38.  Inspect the core bases of a firm’s strategy  Contrast between the expected and the actual results  Take corrective actions if required Strategy Review & Evaluation
  39. 39. Conclusion  Pakistani tea industry is concentrated with Lipton  Further growth and development  Establishment of stronger brands through their innovative and superior products
  40. 40. Thank You

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