tapal danedar

Principles of Marketing 1

TapalTapal DanedarDanedar

Ahsan Zafar

Ali Raza Arif

Areej Arif

Maham Usman

Principles of Marketing

STATEMENT OF CONTRIBUTION

Our Second assignment regarding our chosen brand, Tapal Danedar was a majorly

joint effort on the part of all the group members. Initially, Maham had the contact at

Tapal and so we had chosen this brand. We had interviewed the Assistant Brand Manager

for our first assignment and we also asked her questions regarding this assignment. We

had two group meetings in which we discussed what each group member has to do and

allocated 2 questions to be answered by each group member (8 questions between 4

members). We conducted research online collectively again and utilized some previously

found statistics too. Areej typed the out the interview notes which helped all group

members in answering the allocated parts of the assignment along with this statement of

contribution. Maham made the cover page, table of contents, and formatted the entire

report when it was complete. Ahsan and Ali proofread everything and got our assignment

binded.

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TABLE OF CONTENTS

Product attributes 4

Brand life cycle stage 6

Market segmentation of the brand 8

Type of product 9

Factors considered while pricing and pricing strategy 10

Distribution channel 11

Designing the channel 12

Meeting the challenges in facing channel members 14

Bibliography 15

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Product Attributes

Tapal Danedar and Family mixture are the largest selling tea brands of Pakistan. The brand was born from its inherent granular ingredient. Currently, the brand name has become generic and was even used later by Lipton, after which Tapal launched its own campaign called Asli Tapal Danedar. In this way, the brand now represents a different product category.

Danedar’s features add value to its product because the blend consists of well made premium quality Kenyan BP1s (granules). Each component of Danedar blend is carefully selected to provide a lovely looking leaf appearance that is neat, black and grainy. Tapal well understands the taste of the tea drinkers in the country and the reason for the success is that they have localized the taste according to consumer needs wants and preferences. Danedar brand is known for its distinct taste and aroma and since there is no real substitute for it, it remains the most popular brand of the country and also of Tapal’s product mix.

As far as product style and design is concerned, Tapal Danedar is known to be the leader in innovation and has taken the lead in a number of areas in the tea industry. It was not only the first brand of its kind but was also the first one to introduce soft packaging in the country. Interestingly enough, this soft packaging was changed in July 2008 into hard packaging to offer a unique experience to consumers and a new dimension to the tea market and also the brand. The style of packaging changed to accommodate Punjab, where people prefer to display hard packs for aesthetic appeal.

Tapal Danedar’s style and design is also something all Pakistanis can relate to. “Laal hai toh Tapal hai” is their motto which explains that red is the color which translates our happiness, joys, relations and emotions. It stands out as the color of Pakistani folklore and customs, weddings, festivity and sentiments. Tapal did extensive marketing research and then came out with this vibrant red eye-catching design. Even through its advertisements it explicitly illustrates how the color red is symbolizes togetherness of the nation. From this we can easily conclude how Danedar’s values, features, design and style is compatible to its customers and their lifestyle.

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“Lal hai to Tapal hai”


Quality is of utmost importance, because at its facility, tea is blended and packed in hygienic conditions, untouched by human hands whilst the soft packing technology keeps tea fresh and packaging costs economical. Its success could be gauged by the fact that after Tapal many other tea companies also started using soft packaging. Tapal Danedar’s assistant brand manager while briefing us said “Tapal Danedar is the pioneer of “granular tea” in Pakistan. It has not only sustained its market leadership by providing a consistent quality of tea that brings in superior taste, aroma and colour but has also looked for continual improvement as the recipe for success”.

Tapal Danedar has never compromised on quality and this has been the motto at Tapal since its inception. It is due to this commitment which Tapal Danedar continues to grow that its brand equity gets stronger by the day. In December 1997, Tapal Tea became the first Pakistani Tea Company to earn the ISO-9001 certification: a symbol for the highest international quality standards. Again in December 2000, Tapal acquired the ISO9001: 2000 certification, making it one of the first few companies in the world to achieve this, the ISO9001: 2000 certification system consists of requirements for environment improvement, concepts of TQM (total quality management) which is an approach in which all the company’s people are involved in constantly improving the quality of product, service and business process, with major emphasis on consumer requirements and satisfaction. For Tapal and its brand Danedar, customer-driven quality has become a way of doing business.

Tapal’s research and development is one of the best in the country as blending and tasting and developing new blends according to consumer taste in not at all an easy task and Tapal has mastered this art. Danedar brand known for its localized taste and great taste was the masterpiece that came out of Tapal’s R & D department.

It is a research-oriented company. It conducts various researches in the area of retail audits, consumer behavior, media planning and product development. This research is used for continual improvement in product quality, brand positioning and communication according to the changing requirements of the consumers. This I would consider one of the greatest attributes of the brand. Tapal ensures that taste aroma and freshness is never compromised that is why Danedar tastes exactly as expected and is able to satisfy the huge markets it caters.

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Life cycle stage of Tapal Danedar and corresponding strategy

After family mixture’s success the company innovated further and an entirely new category brand was launched with the name of Tapal Danedar. It was an instant success. Now it has been quite sometime since Tapal Danedar came out. It has enjoyed great popularity among the masses and the term Danedar has almost become generic for tea.

Tapal Danedar is currently at its maturity stage on the product life cycle graph. Large players such as Lipton and Tapal have established their brands in the market and are enjoying huge profit margins. Now they are looking towards product differentiation and multi segmentation because consumers are now more taste conscious and looking for variety available to them in a tea market.

Tapal Danedar is a product at its maturity level so they are finding new multiple segments to differentiate themselves. However, in this phase market share growth is at the expense of someone else’s business, rather than the growth of the tea market itself. This period is the period of the highest returns from the product. Tapal Danedar that has achieved its market share goal enjoys the most profitable period.

Pricing and discount policies should be changed in relation to the competition policies i.e. pricing moves up and down accordingly with the other tea brands and sales and coupons are introduced in the case of consumer products. Promotion and advertising of Tapal Danedar should be done in a way that relocates from the scope of getting new customers, to the scope of product differentiation in terms of quality and reliability. Brand Danedar has done this and has also succeeded in a creating an image for itself and differentiating as the brand of the people of Pakistan through its ‘laal hai toh Tapal hai’

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On the map of product life cycle, Tapal Danedar is in maturity stage.


advertisement campaign. Therefore, currently Tapal’s strategic goal would include defending market position from the competitors and improving the product so that major players like Lipton are not able to grab the market share. Moreover, increasing the size of pie is also a good idea because that means increasing the market of tea drinkers. Supply chain goal at this maturity level would be general and reinforced distribution with good supply to the middle men but with low margins of profit for them.

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Market segmentation

Tea is something Pakistanis are very specific about. Different Geographic locations in Pakistan prefer different types of tea. Some areas prefer dust tea whereas other areas prefer Extra Strong tea. Tapal Danedar has positioned itself as a general purpose tea hence it is preferred mainly by audiences belonging to urban areas. Currently Danedar has a growing market share particularly due to its popularity among the urban youth.

The people who consume other brands under Tapal are considered very loyal to their respective brands, because they are rarely found to switch brands.

Pricing is indirectly connected to the market segments of Tapal Danedar. Pricing can be easily be changed in need based SKUs such as Teabags because people who buy tea bags are more considerate of the convenience factor rather than the price factor. Whereas prices of other SKU’s such as sachets cannot be changed even slightly because they target price sensitive segments of the market.

Marketing Strategy also differs across demographics. In the northern part of the country, mainly in the rural areas of Punjab and NWFP, a BTL approach is adopted with on-ground, direct activities as well as personal selling strategies. In the southern demographic an ATL approach is adopted with TV advertisements, billboards, radio, newspapers etc.

Currently Tapal Danedar has positioned itself as an all-purpose quality brand. With its advertisement directed towards traditions and family values and their deep-rooted links with tea and tea-time. Moreover the Corporate TV advertisements of the Tapal Company set Tapal as a patriotic company with deep-rooted national values. Even our questionnaires showed that the majority of our random sample participants were attracted to Tapal because of its Pakistani Identity Type of Product (Tapal Danedar).

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Type of product

The significance of tea in the eyes of its consumers varies across the type of consumers. What tea means to a youngster differs from what it means to a household of tea “addicts”. Another way to perpetuate its product life cycle was the introduce tea bags backed by the motto ‘differ tastefully’. This was appealing to the working class segment that does not have time to brew tea and consists of ‘minute managers’.

Many students consume tea near exams because it is a good source of caffeine. It helps them to relax and keeps them energized and awake. For students however the brand or quality of the tea doesn’t matter much because all they want is a quick energizer drink. For this segment tea becomes more of a convenience product.

For many families, where tea is consumed everyday and becomes a regular part of the household groceries it can be classified as a shopping good. In families the consumers are more particular about taste, quality and price of the tea. Hence a lot of effort is put into the selection of the proper tea. Some families may like strong tea while others may value color.

Even though basically tea is a convenience product; it can be classified into other categories based upon its image and positioning among the users.

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“These days, people are always on the go and hardly have any time to spare. For those who have a distinct preference…”Tapal newsletter


Factor considered while pricing and pricing strategy

Various factors need to be considered while pricing a product. The factors considered by Tapal Danedar are mainly cost of the tea, demand, purchasing power of its consumers, economic conditions (usually they promote the product through added convenience such as “20% extra tea” or “10 teabags free” and rarely through lowering of prices) and company’s profits, not necessarily in the same order.

According to our contact Saba Ihsan, there exists “sure shot consideration for cost and most of our cost is due to raw tea being an imported product, and the pressures from the international community”. Tapal charges a premium of 2-4% on all its packs. This is what we would call a cost plus pricing strategy. The company emphasizes on Tapal Danedar being an International quality top brand of tea and it is marketed as not only a product available for the masses but also as a premium and “top of the line” product. Tapal Danedar is the only tea brand in Pakistan which caters to SEC A + to SEC D.

All brands of Tapal have prices similar to one another despite offering a totally different product; Danedar, Dust, Family Mixture, and Tezdum. The premiums on all packs are identical too according to our contact Ms. Saba Ihsan. As Tapal specifically caters to different segments of the market its prices are based on its effective value to customers relative to other products. Tapal follows perceived value pricing as all its brands deliver the value that they promise in their value proposition.

Tapal Danedar has various SKUs to facilitate its SEC C and SEC D consumers. Sachets come in up to 3 sizes and all are priced keeping in mind the SECs spending patterns. Our contact mentioned that majority of Tapal Danedar consumers are from middle and lower income groups so the brand has to take care of price sensitive consumers as well. A 200gm pack of Tapal Danedar costs as low as Rs. 80 whereas Lipton; Rs 89 and Brooke Bond Supreme; Rs. 88. For Danedar, come categories (Tea Bag) has to be priced accordingly. While these are perceived to be a luxury and convenience form of tea consumption, Tapal Danedar’s teabags are much cheaper than Lipton’s or Tetley’s. Ms. Sana told us that premiums may increase on higher quantity SKUs but it is the sachet packs of which they cannot change prices of because they usually have very price sensitive consumers.

Tapal Danedar does not implement location based pricing. Even though our contact was adamant about her views that Danedar is popular among the lower classes too, we feel that it does not cater to the rural areas of NWFP and Baluchistan where firstly, people prefer dust tea and secondly, they want inexpensive tea in the unbranded form as it gives them the chance of smelling and looking at what they are to buy before paying for it. However, Tapal Danedar has practiced various market penetration strategies and intensive distribution whilst focusing on the attributes of its tea as well as packaging.

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Marketing distribution channel

Tapal Danedar has a wide distribution network linking various intermediaries which perform assorted functions. Distribution plays a significant role in the marketing mix because it delivers a product to its target market and is a liaison between the manufacturer and the final consumer.

Distributing or Marketing channels overcome the time, place and possession gaps that separate goods and services from those who need or want them. They are sets of interdependent organizations involved in the process of making a product or service available for consumption. The manufacturers supply the distributors with packaged tea and the latter is to supply tea to wholesalers and retailers.

Tapal Danedar is distributed through a conventional marketing channel that comprises of a manufacturer, distributors, wholesalers, and retailers. These perform the important tasks of information dissemination, negotiation, ordering, financing, risk taking, storage, and promotion. Channel members can influence one another but do not have significant control over one another.

At the moment, there are 14 distributors working simultaneously in Karachi. According to our contact, they never face any freight issues as much as they face issues regarding cost of the tea itself! One of Tapal Danedar’s goals is to build a long-term partnership with its intermediaries that will eventually be profitable for all channel members.

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Designing the marketing channel

Analyzing customer needsManufacturers face many complex decisions when designing a marketing

channel. As the channel forms an essential part of the customer delivery network, each channel member is supposed to add value for the benefit of the customer. Availability is important because Tapal consumers prefer to buy from closer location. At first, this special granular tea was only available in Jodia Bazaar and Kharadar, but because of growing popularity, the brand was then sold through retail distribution.

Setting channel objectivesMuch of the marketing channel, particularly in above-the-line and below-the-line

advertising depends on the nature of the target market. As Tapal is a large organization competing with multinationals such as Unilever and Tetley, it has the resources to establish a wide distribution network with many distributors. In the tea market, Tapal Danedar now has a share of 30% with a production of 170,000 tons. Syed Haroon Rashid, GM, Tapal tea states that Tapal tea’s market ranges from Karachi to Rahim Yar Khan. For example, recent examples of BTL campaigns are the Chai Banao, Dhoom Machao, in which marketers travelled across the nation to discover how people related to tea. The marketing channel for Sindh and Karachi is relatively different because it focuses more on ATL marketing. On the other hand, there is more BTL marketing in Punjab because consumers towards the north prefer more face to face interaction. Facing competition head-on, Tapal prefers a wide distribution outlet that is shared by its competitors, which include Lipton, Supreme and Tetley.

Identifying major alternatives Tapal follows the traditional channel of importing tea from Kenya, producing it,

distributing and transporting to retailers:

The cartons of packaged tea are then sold to wholesalers who sell it to retailers and the Retailers usually have a 15% margin. Tapal team performs the vital task of research, survey, evaluation, financing negotiation and payment. Tapal’s intermediaries form a cohesive relationship. There, rather than traditional value delivery network, other alternatives for Tapal would include a Corporate Value Management System, where Tapal possesses its own retail outlets or an Administered VMS that means collaboration with distributors for better marketing. Lastly, another of Tapal’s options may be contracts between distributors to encourage long run stability.

Raw materials from Kenya

Tea is manufactured

Tea sent to wholesalers

Retailers Consumers buy tea

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However, based on an economic criteria, and Tapal Danedar being a well established convenience brand bought through habitual buying behavior, it is better to maintain the traditional network in order to actively face competition on the shelves of supermarkets, general and convenience stores.

As far as Tapal’s international channel is concerned, a major part of the distribution channel involves importing the fine granules from Kenya, which means greater uncertainty and fluctuation in prices.

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Meeting challenges of distribution

In distribution and sales, Tapal, Brookebond/Unilever and Tetley have distinct distributors. 14 distributors work simultaneously, ensuring that the demands are met with and there is smooth flow in the channel from the manufacturer all the way to an individual customer. Qiji enterprise and sales promoters are distributors for Tapal and all its brands. In fact, Mr. Mohammedi Miabhoy, COO of Tapal was responsible for setting up a sales channel in Punjab and NWFP in the 1990s.

The distributors are chosen after careful analysis of the financial background and public relations. Then, the distributors are provided with a thorough description of the network and the costs that will be incurred. If the distributor agrees, the contract is signed and the condition is that the distributor needs to be brand-loyal, pro-active and cannot deal with other tea companies, or the contract will be terminated immediately. The contract states that the distributor or Tapal can nullify the contract after a one month interim period. The area of distribution itself is divided in accordance to north and south.

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Bibliography

1. IOANNIS KOMNINOS PRODUCT LIFE CYCLE MANAGEMENT Electronic Engineer, B.Eng M.Sc.(Eng)

2. Recommended Plan for increasing Tapal ICE tea’s sales<www.scribd.com/doc/9404824/Report >

3. “ANALYSIS OF THE MARKETING PLAN OF TAPAL TEA MAINLY FOCUSING ON TAPAL DANEDAR”<http://www.amcy5.com/index.php?option=com_content&view=article&id=33:sample-project-on-tapal-tea&catid=23:marketing-projects&Itemid=3 >

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Documents

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tapal danedars style

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