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Marketing Management report on TAPAL
- 1. 5/28/2019 Marketing Management Semester Projecton TAPAL Submitted to: ProfessorDr. Sarwar Azhar Submitted by: Name of Student: CMS ID Aaqib Hussain 013-16-0093 Ayesha Jawed 013-16-0084 Aleena Zahid 013-16-0190 Simran Lund 013-16-0060 Syedah Midhat 013-16-0137
- 2. 1 Table of Contents Acknowledgement..................................................................................................................2 ProjectIntroduction ................................................................................................................3 Introduction ...........................................................................................................................4 Company Introduction.........................................................................................................4 Industry Introduction...........................................................................................................5 Market Analysis of Tea Industry .......................................................................................6 Current Distribution Channel of Tapal Tea...............................................................................7 Channel Distribution Map of Tapal Tea ...................................................................................9 1. Customer needs and requirement of Tapal.....................................................................9 2. Competitive analysis..................................................................................................12 3. Marketing power of Tapal..........................................................................................14 4. Supply Chain Capabilities of Tapal.............................................................................15 Channel Distribution Map of Lipton ......................................................................................16 1. Customer Needs and Requirements.............................................................................16 2. Marketing power of Lipton.........................................................................................17 3. Supply chain capabilities of Lipton .............................................................................17 Current Distribution Channel of Map of Industry....................................................................18 1. Customer Needs and Requirements.............................................................................18 2. Marketing power of Tea industry................................................................................18 3. Supply chain capabilities of Industry...........................................................................19 Analysis and Difference among Channels...............................................................................19 Area of Improvement for Tapal.............................................................................................20 Analysis from Customers ......................................................................................................22 Recommendation..................................................................................................................22 Conclusion ...........................................................................................................................23 Exhibit.................................................................................................................................24 Figure (D)............................................................................................................................25 ............................................................................................................................................26 References ...........................................................................................................................27
- 3. 2 Acknowledgement First and foremostwe would like to thank Allah Almighty who gave us the strength and courage to complete this report and make it in best possible way. Along with this we are very thankful to our Professor Dr. Sarwar M. Azhar who helped us a lot in the concepts development and analyzing the case in most efficient way. In last we are thankful to our colleagues, team members whose never ending efforts made this report completed within the specified time period. We have made this report with full support of our Professor and our core team members.
- 4. 3 Project Introduction The projectis aimed to develop a distribution channel map for a Tapal, a tea brand and identify the relevant gap and difference between the current distribution channel and what is possible within the industry and what competitors are doing. Further on, we will proposal new distribution channel and give some recommendation on how they can improve their distribution channel. Tapal tea brand will be the focus of this study because it is one of the most successful and household name for tea brands in Pakistan which is owned by Aftab Tapal and is the purely Pakistani Originating brand. And, we will analysis and create distribution channel to our best knowledge. Tapal company was founded in 1947 and became a brand in 1984 by introducing the Chenak tea dust. Tapal has modern tea blending and packaging factories, warehouses equipped with state-of-the-art equipment and a team of highly dynamic professionals headed by Aftab Tapal himself. Contents of this project includes, Introduction of company then the current distribution channel of Tapal and map it, we will also discuss the industry as whole and draw the possible distribution channel system that can be used in this industry. In doing so, we will also analyze the competitor distribution channel focusing on Lipton as it is the leading brand and is Tapal’s direct competitor. Following this we will analyze them, and provide differences among these three systems /maps. Once we have understood the difference between these three then we will be able to see where improvement can take place in tapal’s distribution channel. Lastly, we will show the relevant stakeholders and clients of the company and how this new channel will benefit them.
- 5. 4 Introduction Company Introduction The journeyof Tapal’s prodigious success is the constant efforts of 3 dynamic generations of the Tapal family. It was initiated by the founder of Tapal, Mr. Adam Ali Tapal. In the very beginning, Tapal became the taste of people; it became the largest sold brand in the tea market, the market that was unorganized at that time. Step by step success of the Tapal made clear path to company to introduce more tea brands in the market to fulfill the taste of the people. Its initial products were sold through retail outlet in the Jodia bazaar in Karachi. The quality of the Tapal impressed the people around, so the consumption and market of the Tapal increased. People from different parts of the Karachi became the consumer. Observing the rush, Mr. Faziullah, the son Adam Ali distributed the tea in different outlets around the city for the convenience of the consumers. Currently the company is under the control of Mr. Aftab Tapal. After completing his education from abroad, he has introduced many new unique ideas and professional management skills in the business. He worked extremely hard to fulfill the need of different people with different taste without compromising the quality of tea. His never ending efforts have resulted in the further strengthen of the company quality. The company now has its modern tea blending, own packaging factories, warehouses with very well trained and expert professionals. The company earned the ISO-9001 certification in the year 1997 and later in year 2000 it also earned the ISO-9001 and ISO-2000 certification making it very first very few companies to achieve this millstone. There is no hard and fast rule or magic for the success of the company rather it is the results of dedication from the management and hard work of the employees. Products of Tapal tea are shown in figure(A) in exhibit.
- 6. 5 Industry Introduction The beveragesindustry in Pakistan has emerged as progressive sector over the years. A comprehensive categorization of the beverage industry would include divisions like; aerated drinks, juices, milk based drinks, energy and sports drinks, tea, and coffee and also, bottled and bulk water as well. In Pakistan different players dominate in different categories, based upon their specialization and target audience. The main players in the beverages industry are: Pepsi, Coca Cola, Nestle, National foods, Tapal and many more. Another major category in the beverages is hot beverages that include tea, green tea and coffee. Every company wants maximum share from the market for which these are providing the tough competition to each other in terms of amount spent by each company on the advertisements etc... Like the example of Coca Cola when they started ad to attract people to consume Coca Cola instead of tea because of the same amount of caffeine in both. This strategy by Coca Cola was great significance to the sale volume of the company. To further go in deep of hot beverages among the top hot beverages tea industry has been growing at same rate as of the population of the Pakistan. In next section we are going to discuss the tea industry in Pakistan. We are going to use porter’s two forces out of five these are: The Rivalry: The competition of rivalry among the competitor is fairly high. With few established brands in the tea market like Lipton and Brook Bond. Now another brand has also been introduced in the market the Tetley. The Tapal is competing with all these brands. The Lipton and Brook are the products of the Unilever that is known as the giant of this industry. It would be extremely hard for any new local tea brand to compete with such giant brands but Tapal has challenged Unilever in terms of marketing campaign for the tea. They have created much better advertisements relative to the Unilever for which they have survived in the market. There is no significant difference among the prices but every brand is spending heavily on the ads to achieve competitive advantage. The Bargaining Power of Customers: The bargaining power of the buyer is relatively low because of the huge demand. Although the competition among the brands is very high yet there is little or no difference in prices. The tea lover even prefers quality of the tea
- 7. 6 over the priceof the tea. In case of tea an element of brand loyalty is also associated so a consumer would want to use a same brand which gives in his bargaining power. The tea market in Pakistan has grown tremendously over the decades. A survey was conducted by Iris communication in which it was found that there were 66% females and 65% males who preferred tea over the other beverages in the Pakistan. In numbers there were 53% youngsters aged between 15-22 years, and 67% adults aged between 21 and above were preferring tea over the beverages. This massive amount of consumption of tea is the result that tea is considered as integral part of Pakistani culture. The tea market in Pakistan is divided into two aspects I-e Branded and Unbranded tea. The ratio between two is 55% and 45% respectively. Unilever is the biggest competitor of Tapal in terms of Branded tea in Pakistan. The Unilever’s strong products in the market are: Brook bond supreme and Lipton that are enjoying the market share of 55%. The Tapal on other hand has the branded market share of 28% in the Pakistan. The tea industry is growing with the population growing rate in Pakistan that is quite impressive for the tea manufacturers. The main players in the tea industry are; Lipton, Brook bond, Tapal, Tetley etc. Market Analysis of Tea Industry
- 8. 7 Current Distribution Channelof Tapal Tea After the understanding of Tea industry and Company’s introduction, we are now focusing on the Channel distribution of tapal tea in order to know their channel effectively and propose some improvement after analysis between Tapal, Lipton and Industry Distribution channels. Channel of distribution is a path through which products move from one place to other so Distribution plays an important role in marketing mix of one of the 4p’s for Delivery of products to its target consumers, so Tapal is using indirect distribution channel means use of one or more intermediaries to make the product available that comprise of intermediaries between manufacturer and final consumer. Tapal has two-level channel intermediaries that are distributors and retailers .Distribution network of Tapal is divided in to two regions north region that include Karachi ,Hyderabad , Sukkur and south
- 9. 8 region that includeLahore , Islamabad , Multan ..Tapal has two production plants in Karachi. Tapal has 5 warehouses in Pakistan that include cities like Karachi, Hyderabad , Sukkur , Multan , raiwand in these warehouses products are stored and then move to the distributors and then they move it to the retailers and finally to consumers . Tapal’s mission was to capture the tea market of Karachi but now it has nationwide distribution channels of over 400 distribution networks from Karachi to Khyber . Tapal is one of the most selling brand of Pakistan serving its consumers through more than 140000 outlets in Pakistan, it is sold through number of channels as superstores ,merchants, department stores , retail outlets ,general stores ,wholesale shops , medical stores , utility stores and grocery stores among them grocery stores and merchants contribute 80% volume of tea sales . Tapal distributed in cities with given coverage as Karachi 14%, Lahore 34%, Islamabad 18%, Sukkur 22% and Hyderabad 12%. Tapal has two types of distributors limited distributors that are responsible for modern trade; third party distributors are responsible for general trade. The tea market of Tapal is divided in to three market segments lower segment that consists of rural and urban areas that consists of 70% of the total market segment, middle segment that consists of middle and upper income in urban areas that consists of 20% of the total market segment, upper segment that include consumers in upper income segment of society that consists of 10% of total market segment.
- 10. 9 Channel Distribution Mapof Tapal Tea In previous section, we discussed the distribution of channel of Tapal, now we will create a distribution channel map focusing on the four important components that are: 1. Customer needs and requirements 2. Competitor Analysis 3. Power Channel 4. Supply chain capabilities These four will help us in finding the value Tapal is giving to its customers, what competitor advantage they have and what are their supply chain capabilities. 1. Customer needs and requirement of Tapal Value Proposition of Tapal A value proposition is a promise of value to be delivered, communicated, and acknowledged. It is also a belief from the customer about how value will be delivered, experienced and acquired. A value proposition can apply to an entire organization, or parts thereof, or customer accounts, or products or services.Tapal creates its value by providing them good quality of tea. With every cup of Tapal Tea discover a whole new world of taste, aroma flavor, which will certainly make you fall in love with every sip. Segmentation, Targeting and Positioning Of Tapal Segmenting, targeting and positioning (STP) is a broad framework that summarizes and simplifies the process of market segmentation. Market segmentation is a process, in which groups of buyers within a market are divided and profiled according to a range of variables, which determine the market characteristics and tendencies. The processes of segmentation, targeting and positioning are parts of a chronological order for market segmentation. Segmentation comprises identifying the market to be segmented; identification, selection, and application of bases to be used in that segmentation; and development of profiles. Targeting is the process of identifying the most attractive segments from the segmentation stage, usually the ones most profitable for the business. Positioning is the final process,
- 11. 10 and is themore business-orientated stage, where the business must assess its competitive advantage and position itself in the consumer's minds to be the more attractive option in these categories. Here now we are going to discuss STP framework of Tapal: It is difficult for any one company to engage in mass production, mass distribution and mass promotion for its product. The complexities arise from the proliferation of advertising and distribution channels and the high costs associated with reaching a mass audience. Therefore, companies segment the market so that they can target the group of customers who share similar needs and wants. Tapal focuses on aroma and taste that establishes the strong family bonds. Tapal did it accurately by offering 9 different brands for different segments. They focus on the diversified needs and wants of consumers and this thing offers competitive edge for Tapal to fulfill the one or more groups of buyers. Tapal targets social as well as professional class in rural and urban areas, its different brands target differently like, Tapal Family Mixture The family mixture is targeted for joint family system which is still the major part of Pakistan Tapal Tez Dum This brand is targeted for segment who like strong cup of tea. Like in one Tapal Tez Dum Advertisement its statement is “Tapal tazdem lagay tha ker ke” Mezban Premier Dust This brand is targeted for the people who prefer strong cup of tea as it became a favorite brand for the people of Sindh. Chenak Dust This brand has strong flavor that some people prefer. It is popular in Sindh Tapal danedar and danedar tea bags This brand offered to target the social class of urban areas.
- 12. 11 Tapal has positioneditself with showing enthusiasm towards traditions, togetherness, unity and bond, which provide the quality mixture offerings and their deep rooted link with tea and tea time. Positioning of Tapal is medium priced and low cost strategy and providing high quality hot tea beverage. Tapal maintains its current market and current customer’s satisfaction. TAPAL Age Occupation Lifestyles End users Tapal Danedar 25-65 housewives housewives Households/offices Tapal Family Mixture 25-50 housewives Female who pride themselves in family values & cohesiveness. Households Tapal Safari Chai 18-30 athletes Young, adventurous & energetic individuals Athletes athletes Mezban Premier Dust 13-75 housewives Interior Sindhi families who pride in smooth house hold running, family bondage, hospitality, 'mehman nawazee' & quality servings Households Tapal Special teabags 18-35 professionals Active, busy & working consumers younger in age Traveler/ workplace
- 13. 12 who seek convenience &in their busy lifestyles Jasmine Green Tea 22+ housewives Health conscious, dieting females. Households/offices Tezdum 25+ Farmers/athletes Vigorous/energet ic Households/dhabb as Chenak Dust 25+ Housewives/ blue collar workers strong Households/offices Ice Tea 18-35 students Outgoing active Restaurants/ 2. Competitive analysis It’s used to evaluate the activities of outside competitors. The analysis seeks to identify weaknesses and strengths that a company's competitors may have, and then use that information to improve efforts within the company. An effective analysis will first obtain important information from competitors and then based on this information predict how the competitor will react under certain circumstances. Nature of Competition Tea industry is very sensitive in terms of prices, companies have to play major role in grabbing the market. Tapal follows high-medium price strategy in which it offers high quality tea at reasonable prices. Tapal also follows a Going Rate Pricing strategy, in which it bases its price largely on competitors’ price that is Unilever. Unilever being the market leader always sets the price, and then Tapal accordingly allocates its prices, always lower than that of Unilever. Tea prices have fallen over the years which are because of reduced import duties and costs. Besides taking the competition into account, Tapal does cost plus pricing
- 14. 13 55% tea comesthrough smuggling and companies have to play on rest of the ground. In order to be market successor, companies have to cater all the aspects of marketing. The essence of tapal success is based on its core values which are Trust, Quality, Creativity, Innovation, Leadership and Unity. Tapal has positioned them as family tea, whereas, Lipton has positioned itself as business person’s tea. Both of them follow almost same marketing strategies to attract customers. Vital tea has targeted rural areas of country, whereas, Tetley has targeted itself as premium price tea. Competition is direct between both but they have not positioned themselves well. Tapal has indirect competition between Vital and Tetley. Ongoing and Upcoming Trends in Tea Industry As work environment is becoming more stressful, people require different forms of refreshment and intakes to increase their energy levels. This further increases the intake of tea at workplaces. So make it easy at workplace companies introduced “Tea Bags”. It triggers the need of ready to take hot drink. Secondly Young urban consumers are increasingly health-conscious and active. Fitness regimes and crash diets are boosting their interest in healthier products. So, seems opportunity for companies to come up with healthy drink that is “Green Tea”. Moreover, now days, intake of carbonated, soft drinks (cold drinks) are going lower in our society due to health reasons. So, companies have option to come up with variety of “Ice Tea” to fill this gap. Tea in Pakistan is more than simply a beverage. With its high cultural significance and deep-rooted consumption traditions, tea drinking is a tough habit to break. Well in upcoming days, Coffee culture is also growing
- 15. 14 fast in urbanareas of country and becoming the competitor of tea. Biggest Rivalry in this industry Today Tapal has become the largest, 100% Pakistani owned Tea Company in the country. Tapal has 9 brands. But It’s one of the major competitor is UNILEVER by Lipton. In order to compete with its competitor, it is using different defensive strategies in order to gain control of that territory the Lipton has been able to manage. One more advantage of Lipton is that they have history but Tapal does not have. Most of the house wives use Lipton as it is being used by them from their families to families. (Shares info) “Unilever enjoys leadership with approximately 54% of Pakistan’s tea market and 46% from export. Tapal stands out as the major competitor for Unilever with 28% share.” Tetley tea, a joint venture b/w Lakson Group and Tata tea of India, was introduced early this year and it has approximately 4% share, which is continuously decreasing. Other players in industry are Kohinoor Tea Company, Vital Tea Company and Alpha Tea Company. Last year Tea consumption in Pakistan is summarized below: Recent News A couple of brokerage houses reported recently that Lever Brothers Pakistan Limited had made a “firm bid” to take over Tapal Tea (Pvt) Limited. With both Lipton and Brooke Bond already in its fold, Lever enjoys leadership with 45% of Pakistan’s tea market. Tapal stands out as the major competitor for Lever with 25% share. 3. Marketing powerof Tapal As above we have described the competitor analysis of Tapal we are moving further on marketing power in which we tell about the market power so it refers to company’s ability to dictate the price of an item in marketplace by manipulating supply and demand conditions as Tapal has relative strong position in market because it is the biggest commodities market in Pakistan .Today Tapal has 17% share of total tea market of 22 million , according to per capita tea consumption in Pakistan is 140 million ( demand) from which 30 million is smuggled and 110 million is by import so 70 million is by
- 16. 15 branded market fromwhich Tapal is one of the leading meeting needs of 60 million kg consumption . Tapal has 41% markets share because tea market is more than 150000 tons from which Tapal is 70000 tons of unorganized market. Tapal has 25 % market share in Pakistani tea market. Tapal is market leader and largest selling brand in Pakistan. Tapal has 28% of market share in unbranded market ( 47% ) .As according to presence of Tapal tea on more than 140000 outlets in Pakistan that include superstores, general stores, merchants, grocery store etc. because it has wide distribution network in north and south regions of Pakistan. So as the Tapal has distribution channel that is comprised of 405 national distributors, 16000 retailers in Karachi from which 95% are served by Tapal. The physical presentation of market share is shown in figure (B) in exhibit. 4. Supply Chain Capabilities of Tapal Tapal has become the household name in Pakistan and is successful. One of the reasons behind it is definitely their supply chain capabilities, which include: Inventory management, Warehousing, logistics management, supplier selection, production planning effective research and development department, purchasing and ordering methods and highly professional team headed by Aftab tapal Himself. For inventory management they use FIFO system which saves money and time in calculating the exact cost of the inventory being sold because the cost will depend upon the most former cash flows of purchases to be used first. Another capability is Warehousing; they have ware houses in Sukkur, Raiwind, Multan, Lahore, Karachi and Islamabad, basically they have covered their distribution in two divisions north and south and the demand is fulfilled by these warehouses in each division. 15 days inventory can be hold, around 800, 200, 200, 100, 400, and 50 tons at Karachi, Hyderabad, Sukkur, Multan, Raiwind and Islamabad respectively. Production planning is done each week in order to forecast production for upcoming week at Tapal. Their Supplier selection is also done very carefully and after a great evaluation on the basis of quality and less error chances. Finally, their Human resource and research and development department which come up with new ideas and unique techniques such as they have also launched ice tea and bubble tea, these are the capabilities that make Tapal one of the biggest tea selling company in Pakistan.
- 17. 16 Channel Distribution Mapof Lipton Previously we have done the Distribution Map of Tapal in which we defined the customer’s needs and requirements, supply chain capabilities and power channel. Following that, we will now focus on Lipton’s distribution map so at the end we can draw difference between them. Lipton’s distribution map will also includes the same four components that are customer’s needs and requirements, supply chain capabilities and power channel. 1. Customer Needs and Requirements Segmentation, Targeting and Positioning Of Lipton Lipton is competitor on the international level, it segments the market on geographic demographic and psychographic basis, they segment social class and Lipton applies undifferentiated marketing or mass marketing as it focuses on equal benefits for everybody and follows one market with one offer strategy. The reason is to become a market leader in the future.
- 18. 17 Lipton Yellow Labelis working in more than 110 countries therefore the target market is global village that consists of people with different cultures, taste, habits and food. It targeted the urban areas, hotels, restaurants, cafe and banks. Lipton is targeting for upper middle, upper lower and upper middle class. The teabags are targeted toward the upper high class. The age group segment selected for Lipton is between 15-60. 2. Marketing powerof Lipton As above we have described the competitor analysis of Lipton we are moving further on marketing power in which we tell about the market power so it refers to company’s ability to dictate the price of an item in marketplace by manipulating supply and demand conditions . Lipton is now world leader in more than 150 countries. market share of Lipton is 14% 84% of elite and higher middle class prefer Tapal tea where as 95% of middle and lower middle class prefer Tapal tea as Lipton is leading brand in international market that has headquarter in Karachi and 650 distribution networks all over Pakistan on hyper star , small retail stores , super markets , retail stores , metro , CSD , super stores, convenience stores , Lipton is present in more than 180000 outlets in Pakistan. Lipton has 26.5 % market share in UK and 15% in Indian market. Lipton has 43% market share in sales. Lipton is number one manufacturer and exporter of 57% tea bags. Lipton has 45% of Pakistan’s tea market with 46000 tons of tea in branded market. 3. Supply chain capabilities of Lipton Supply chain capabilities of Lipton includes, the backward integration system as it owns tea states in Kenya, Tanzania, India making it one of few companies that are actively in involved in whole value chain of tea, from growing it to marketing it. The research and development department of Lipton is highly efficient and comes up with unique product formulas like another capability is their Trade system, Trade between producers and buyers usually takes place at auctions, facilitated by brokers. Brokers communicate information regarding supply and demand, and indirectly determine the price of tea. 70% of the global tea production is sold through auctions. The logistics system is also very efficient as their 60% of tea dust is transported from foreign countries like India, Kenya Tanzania etc through smallholder producers of tea that are owned by Lipton.
- 19. 18 Current Distribution Channelof Map of Industry After creating the distribution map for Lipton and Tapal, We will now develop the distribution map of Tea industry in Pakistan, so that we can analysis and provide difference among all these three and propose improvement for Tapal’s distribution channel. 1. Customer Needs and Requirements Tea industry is segmented on the basis of tea type, cost, consumption, packaging, distribution channels, application and geography. There are 8 tea types offered in the market such as green, black, herbal, white etc. there is mass production and mostly consumed traditional tea and at premium price the specialty tea like tea bags. it packaged in plastic containers, paper boards, aluminum tins tea bags and RTD. tea is distributed on supermarkets ,hypermarkets, convenience markets , wholesale markets, online store and also by 3rd party logistics. Applicants of tea are residential and commercial. In Pakistan Consumers prefer tea because it provides them health benefits and relaxation This new trend of reverse the consumption to in-home, instead of out-of-home, is not new in what concerns tea. In fact, tea consumers considered home as their elected place to take tea. This leads to demands as quality and convenience Although home is the main market, there is also a need to consume tea out-of-home; in fact, workplace was chosen 45% of the time, as a place to take tea. In this sense, convenience is also a need for those consumers too, more precisely the transportation factor. Variety is another need felt by consumers. Actually, 72% of tea consumers assume that they drink tea since there are a large variety of existing flavors 2. Marketing powerof Tea industry After doing competitor analysis of tea industry we are moving towards marketing power of tea industry as the Pakistan has huge market of tea that has some main brands like Tapal, Lipton, and Tetley and vital. Pakistani Tea market is divided in to branded tea market with 57 % share and unbranded tea market with 43%. As the total tea consumption in Pakistan is more than 150000 tons, Pakistan is the third largest tea consumer and importer of tea in the world, Pakistan has consumption of per capita of tea is 1 kilogram per Annum.
- 20. 19 according to porterfive forces model tea industry of Pakistan has market power over the supply and demand because bargaining power of buyers is low because of high demand of tea due to increased price competitions buyers have little power of bargaining on price . because prices are relatively same among competitors , second bargaining power of suppliers is high because there are few supplier that force manufacturers to choose from them , supplier has power because raw tea is limited , third rivalry among existing competitors high because there are few brands like Tapal , Lipton , brook bond in market that are competing with local chai market .Tapal (The leader): Tapal is selling Tapal tea over 140000 outlets across Pakistan with more than 400 distributors so it has 41% market share in sales , Lipton (The challenger): Lipton is selling on more than 180000 outlets in Pakistan with 650 distribution offices across Pakistan. So Lipton has 43% market share in sales Vital (The follower): vital brand is selling globally as well as nationally vital tea is available to more than 50000 outlets in Pakistan. Vital tea has more than 200 distribution offices all over Pakistan. Vital has 6% share in total sales, Tetley (The follower): Tetley has 4% share in market with 3700 tons, Tetley has 4% market share in total sales. And other brands have 6% share. 3. Supply chain capabilities of Industry Supply chain capabilities needed in tea industry are: Better Trade Action systems/management as mostly tea is brought through trade auctions. The advanced inventory management is also important because it provides the power to automatically determine the proper inventory control for each SKU, leading towards the better customer service. The Demand planning capabilities, the demand planning team must include business forecast champions who are able to forecast the demand accurate as in the tea industry demands can be fluctuations like high demand in winter and lower in summer. The efficient warehousing systems so that there should be no shortage and stock outs at particular division. Analysis and Difference among Channels 1. Tapal is not strong enough to support the export whereas Lipton has major share in
- 21. 20 international market. Page:13. (Share info) 2. Tapal have majorly indirect distribution channel (See Figure (C) in exhibit) while Lipton have direct, indirect and third party distribution channel as well. (See Figure D) 3. Tapal has a conventional marketing channel that comprises of producer, wholesalers, and retailers. Each is a separate business seeking to maximize its profits that results in a conflict among the channel members, as no channel member has complete or substantial control over other members. While Lipton have integrated marking channel. (See Figure E) 4. Tapal have very less sales in Hyderabad and KPK side as compare to Lipton. 5. Tapal has space in online channel in comparison to their competitors because people want to get variety of flavors in tea on one click. 6. Tapal imports most of raw material from different areas of world, whereas Lipton owns 80 percent of land from where they purchase raw material. It also help to decrease their cost. 7. Lipton charges relatively higher price than Tapal and less varieties than Tapal whereas Tapal targets nine different segments.1kg of Lipton is Rs.600 and Tapal in Rs.475. See it in above section (Nature of Competition) 8. Trends are shifting and people are moving towards coffee. Unilever already take initiative to move and have coffee but Tapal lack at this point. Area of Improvement for Tapal As we said in above section that Tapal’s distribution network is facing actually
- 22. 21 channel conflict. Stakeholdersin Tapal’s distribution network cater themselves as independent channel members who pursue their own objectives. Therefore distribution of the brand gets effected. Moreover, services are overlapped within this distribution hierarchy, that is, duplicate services are there that need to be eliminated. Shelf positioning strategy is also not much well planned that causing unhealthy placement in market. So, after considering the problematic area, we have suggesting them to improve the vertical Marketing System (VMS). Which comprises of producer, wholesalers, and retailers acting as a unified system. In VMS one channel member, the channel captain, owns the others or franchises them or has so much power that they all cooperate. The channel captain can be the producer, the wholesaler, or the retailer. Rational: VMS can eliminate the channel conflict that results when independent channel members pursue their own objectives. They achieve economies through size, bargaining power and elimination of duplicated services. Tapal have three VMS options: 1. Corporate VMS It combines successive stages of production and distribution under single ownership. If Tapal wants to have a high level of control over its channels than this method is best suitable. For example, Tapal can have its own retail outlets. 2. Administered VMS Manufactures of a dominant brand are able to secure strong trade cooperation and support from resellers. For example Tapal can able to command high levels of cooperation from it resellers in connection with displays, shelf space, promotions and price policies
- 23. 22 Tapal can alsohave a Contractual VMS consists of independent firms at different levels of production and distribution integrating their programs on a contractual basis to obtain more economies or sales impact than they could achieve alone. By using these power channels they have to increase their distribution in KPK. Because of their climate reasons in this region, they can capture 34 % of their targeted customers. They have to move online as well. Because there RND department have “IT” capacities to serve large range of caffeine products to their young targeted customers, who wants convenience and new experiences in their taste. As trend is shifting, so they have to give tough time to their soft drink competitors by launching variety of ice teas. Analysis from Customers In Pakistan we have asked from different consumers and we analyzed 90 percent of the people take tea to get relax and 46%of the people prefer Tapal tea because it is less costly and in different flavors. And they told us Tapal is easily available everywhere in the market from Kriyana stores to departmental stores. 68% consumers prefer Tapal because it provides aroma of their culture. Recommendation Though the brand has achieved a lot of success in the past as well as in present, yet there are many future challenges it may face that can result in operations and success of the company. To effectively handle these issues the company should take the following measure into account: The technology has greatly influenced on the consumers as well as the producer. Since the way of living, consuming and spending of the consumers has changed over the past few decades. The consumer wants as much of convenience as the producer can provide them. They should have open eye on the competitor’s actions, strategies and relations with consumers. Then they should develop their own strategies accordingly.
- 24. 23 The thirdsuggestion is that they should focus on the customers taste because with the globalization and modernization the taste of the consumers is changing that can result in great setback to the company if the proper measures are not taken. Conclusion As our key point in this report was to understand and develop channel distribution map of Tapal and propose new distribution channel and see if there’s room for improvement. In order to so this, we developed the three different channels distribution maps (Tapal. Lipton and Tea Industry) through that we gathered the differences among these three and came up with improvement that Tapal should adopt. After careful understanding of channel distribution and difference we came up with some recommendations for improvement. Firstly, Tapal can introduce third party logistics just as Lipton so that they can increase their exports. Secondly, they can introduce online channel of distribution because by this they can serve large range of caffeine products to their young targeted customers, who wants convenience and new experiences in their taste and they can easily adopt this as Tapal’s Research and development department and human resource have great IT capabilities. Another recommendation for Tapal is to do product development by introducing Coffee just like Unilever by this they can capture more market share and also for this they will have to develop another channel for bring improvements in the current one because coffee is entirely different segment so they have to come up with new capabilities and improvements.
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