Research Report on

Strategic Marketing & Planning

Tapal Tea Private Limited

Plot 40, Sector 15, Korangi Industrial Area, Karachi

Submitted To:
Sir Ekhlaque Ahmed

Submitted By:
Imran Ali – 8862
Muhammad Bilal – 8698
Arsalan Yousuf – 8677
Date: 17-04-2010

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TESTIMONIAL

We bow towards, The Great Al- Mighty ALLAH for showing us, the strength and courage for all the challenges
through out our journey in exploring the wonders of this visionary and dynamic subject of “Strategic Marketing
Planning”. Indeed, we are grateful to our mentor Sir Ekhlaque Ahmed, whose dedication, guidance and enthusiasm
for the subject always persuaded a challenge for us to become and prove that, how good we are business
managers. We had at most optimum, placed our sincere efforts and sheer hard work to satisfy our mentor with this
report. We would always like to remember and honor with gratitude toward our family & friends, in supporting and
motivating us during days, we felted low and finally, the TAPAL people specially, Mr. Haroon Rashid whose endless
support glimpsed a ray of hope and success to this project. Thank You

Imran Ali

Muhammad Bilal

Arsalan Yousuf

Table of Contents
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Company’s Profile.................................................................................................................................................4
History of Tapal................................................................................................................................................4
Business Scope.....................................................................................................................................................5
Market Structure of Industry...............................................................................................................................9
Market Structure of the Company.....................................................................................................................10
Market Size - Past four years – Qty (Tons)..........................................................................................................11
Market Size - Past four years – Value.................................................................................................................12
Market Size - Next four years – Volume (Tons)..................................................................................................13
Assumptions for Growth................................................................................................................................13
Dust Tea Segment......................................................................................................................................13
Leaf Tea Segment......................................................................................................................................13
Mixture Tea Segment................................................................................................................................13
Green tea Segment...................................................................................................................................14
Iced Tea Segment......................................................................................................................................14
Product Life Cycle...............................................................................................................................................14
Competition Growth matrix...............................................................................................................................15
Porters Five Forces Model..................................................................................................................................16
Threat of New Entrant...................................................................................................................................16
Bargaining Power of Buyer.............................................................................................................................16
Bargaining Power of Suppliers.......................................................................................................................17
Rivalry between Competitors........................................................................................................................17
Threats from Substitutes...............................................................................................................................17
Environmental Factors...................................................................................................................................17
Technological.............................................................................................................................................17
Political......................................................................................................................................................18
Economic...................................................................................................................................................18
Social and Cultural Forces..............................................................................................................................19
Company and Competitor Analysis....................................................................................................................19
Distribution Structure: Shift from 2008 To 2012................................................................................................22
Distribution Shares And Company’s Positions (2008)........................................................................................23
Top 5 External Trends.........................................................................................................................................24
SWOT Analysis....................................................................................................................................................25
Strengths........................................................................................................................................................25
Weaknesses...................................................................................................................................................25
Opportunities.................................................................................................................................................25
Threats...........................................................................................................................................................25
Value Chain Model.............................................................................................................................................27
Human Resource Management.....................................................................................................................27
Technology Development..............................................................................................................................27
Procurement..................................................................................................................................................28
Primary Activities...........................................................................................................................................28
Inbound logistics.......................................................................................................................................28
Operations.................................................................................................................................................29
Outbound Logistics....................................................................................................................................29
Relative Importance of Factors..........................................................................................................................30
Rating Against Customer Buying Criteria...........................................................................................................31
Impact of Issues on Strategic Profile..................................................................................................................32
Statement of Commitment................................................................................................................................33
Business Objectives and Targets........................................................................................................................34
In Short Term.................................................................................................................................................34
In Long Term..................................................................................................................................................35
Segmentation Variable of the Consumer Market..............................................................................................36

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 Geographic.....................................................................................................................................................36
Cimate............................................................................................................................................................37
Demographics................................................................................................................................................37
Psychographic................................................................................................................................................37
Behavioral......................................................................................................................................................37
Action Plan.........................................................................................................................................................40

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Executive Summary

We the students of the College of Business Management were required to submit a report on "Strategic Marketing
& Planning”. There by we have full filled our requirement and have listed our findings in the following pages. We
were required to choose a company and analyze all its activities in detail so we chose Tapal. Tapal had always
ensured its landmark in quality standards and because of this factor customer value and standards had proved its
ultimate goal of customer satisfaction. Today the market share of Tapal have reached the top even in this economic
crunch, but on to becoming a leader the company should provoke to raise the bar on a continual basis and to
address key success factors, only through mitigating the key issues. In order to achieve the objective of this report
we had to rely on our own analytical skills as well the information we received from the major players in the
Industry i.e. mainly the three leading Tea manufacturers in the Industry as the likes of Tapal, Unilever, Clover
Pakistan and Eastern Tea. We even went further to compile consumer views about different brands and the
distributors opinions on the different brands available. To full fill the extensive requirements of this report we broke
each and every one of the company’s activities in order to conduct and procure a more in-depth and more
meaningful analysis. For each activity analysis tools such as Internal Factor Evaluation Matrix, External Factor
Evaluation Matrix, In-Depth Activity Cost Analysis and Competitive Profile Matrix are just some of the tools used in
the following pages to bring a consistent and better analyzed answer. We hope the following pages will be better
able to answer and give thoughtful insight into Tapal Tea, its competitors and the Industry in which it operates
especially in the light of Pakistan’s economy.

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Company’s Profile

The journey of Tapal's remarkable success is the combined efforts of three generations. Adam Ali Tapal was the
founder of the Tapal Company. The saga of Tapal started with his formulation of a unique tea blend, which was later
named family mixture that led to the Tapal brand becoming a hot favorite, and eventually the largest selling brand.

Taking a step forward from this humble foundation, Tapal moved up the ladder of success by innovating and
introducing different tea brands to suit every taste and pocket, which were sold from its retail outlet in Karachi’s
Jodia Bazaar.

People from all parts of the city flocked to the outlet to purchase Tapal tea, and soon, the quality of Tapal teas
became legendary. The company continued to thrive and grow under the management of the founder’s son,
Faizullah A. Tapal, who initiated tea distribution to retail outlets around the city for the convenience of the people.

History of Tapal
The saga continued, and new horizons were explored by the founder’s grandson, Aftab Tapal who gave a whole
new meaning to the concept of tea and developed a wide range of tea blends catering specifically to the tastes of
people throughout Pakistan.

He introduced professional management and unique production ideas to the business. Being one of the few
professional tea tasters in the country, and a tea connoisseur himself, his progressive outlook has given further
strength to the foundation of quality laid by his family, and has bought the Tapal company to newer and higher
levels of success.

Evolving and innovating its way through its near-60 year history, Tapal is presently the largest, 100% Pakistani
owned tea company in the country.

Its has set new standards for 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.

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Business Scope

In Pakistan, Tea is undoubtedly the national drink and it has more consumption than any other type of drink
available in the market today. It is estimated that Pakistanis consume over 160 million kg of tea worth over 4.5
billion rupees every year. Despite the increasing emphasis on its hazardous effects on health and the continuously
rising prices, due to the low literacy rate and unavailability of a better substitute, the demand and the consumption
has increased over the years and is growing at an annual rate over 3.5%.

As a consequence, Tapal desires a high level of customer satisfaction and unflinching brand loyalty through
commitment to quality and constant innovation. What deserves to be mentioned is Tapal’s products are various
with premium quality and have passed the ISO-9001: 2000 quality system certification. A unique combination of
high- grown Kenya tea leaves and dust, that gives a refreshing aroma of leaf and strong taste of dust all together in
one cup. Tapal is a family name and calls attention to tea as an integral part of our lives whether it is day or night or
any time as a source of refreshments and revitalize.

Tapal has a diversified customer base ranging from urban to rural areas including various institutions. People go
with Tapal to get the Hence; Tapal’s target market mainly consists of young adults and adults belonging to high,
middle and lower income groups who are primarily living individual and in family gathering.

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Business Scope describes “The Business we are / want to be in” through the eyes of the customers. It defines the
areas of operation for the organization. It encompasses the following questions:

 Specific Region
Regions = where?

Tapal Tea, the country’s largest National Tea Company, has manufacturing capability in the country at its three
plants located in which two are in Karachi and one in Raiwind. The mother factory in Karachi only produces 65% of
the total Tea categories like Danedar, Mezban, Family Mixture, Shades of Green, Chenak, Tezdum and Ice Tea to
fulfill its major share contributing south market. The other manufacturing plant in Raiwind mainly produces two
categories i.e. Tezdum and Family Mixture.

The head office for the operations is based in the cities of Karachi and Lahore with warehouses maintaining the
organization’s presence in the cities of Hyderabad, Sukkur, Multan and Islamabad.

To meet customer requirements everywhere, Tapal Tea further expands its network through Utility Stores, Army
Stores and Modern Trade Network country wide.

The only company owned shop located in Jodia Bazaar, Karachi to which it started his business in 1947 as both
whole seller and retailer. It’s Tea Blending and mixing center is located in Karachi.

Tapal Tea has divided the country into two main and Six sub regions as;

South
Karachi
Hyderabad
Sukkur

North
Lahore
Multan
Islamabad

These Regions further classified into Zones/Territories and Towns to extensively cover the market.

Tapal Tea is currently exporting to Asian counties of Afghanistan, Middle East, USA, Australia and, other European
continents which constitute around 1% – 2% of their total sales.

 Functions / applications
Functions / applications = what needs?

Tapal Tea is catering to the basic need of “Tea” accompanied with “Quality and Affordability”.

Customer seeking needs would be:

Primary Attributes:
o Strong Taste
o Aroma
o Color
o Premium Quality

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Secondary Attributes:
o Price
o Availability

 Customers
Whose needs?

“Rural and Urban” – They are catering to the needs of people living in Rural Areas of Pakistan, as the main market
for Tapal Tea happens to be the people from rural areas as its 68% of the total population of Pakistan. Besides, it is
also catering to the need of people from urban areas as they also constitute a significant percentage of their total
market share.

 Added value
For Distributors:
o Competitive Margins
o Credit Facility
For Traders & Wholesalers:
o High margins
o Quantity Discounts
o Trade promotions and incentives
o Shop Branding + merchandising Rent
o Timely Oder Delivery
o Shelf Space Rent

 Considerations
Diversify the business in the complementary products.

 Boundaries and Future Scope

- Matching production with increasing demands in the future.
- Bringing new products (ranges) for new segments and untapped markets
- To broaden exports function in Middle East and other international markets; and prove existence in
international markets.
- To maintain the leading position in the local market.
- Modernizing operations and optimal capacity utilization.
- Restructuring strategies for the bottom of pyramid customer base.
- Customer oriented pricing strategy
- Tactical media strategy for each brand
- Strengthen the brands and communication to avoid internal cannibalization.

Input:

Tapal always seeks out different arenas to beat the competition while struggling to maintain the existing share, plan
trade driven promotions to strengthen the long term relationships. To be an aggressive player in the market it is
trying to exploring international markets where it can not only penetrate, diversify and make long-term investment
but also harvest its current business.

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 Market Structure of Industry
Loose /Mushroom
Category Tapal Unilever Clover Pakistan Eastern Tea
Tea
Mezban Dust Pearl Dust Surhan Dust
Dust Royal Dust Available
Chenak Dust Red Rose Dawn Dust
Danedar Lipton Yellow Label
Tetley World
Leaf Tezdum LYL Teabags Vital Chai Available
Tetley Teabags
DD-Teabags Supreme
Mixture Family Mixture - - Vital Chai Available
Jasmine TBs
Elaichi TBs
Green Tea Clear Green TBs - - Available
Lemon TBs
Gulbahar
Tapal Ice tea Lipton Iced Tea
Iced Tea - - -
(Can + Powder) (Powder + Can)

Inputs:

Tapal is present in all the brand segments of Tea industry but there is a gap in the mixture and Ice Tea segments so
Tapal must develop strategic plans to enhance these two categories.

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Market Share

Quantitative findings

 Over all the branded Tea market has been greatly dominated by Tapal, stealing 43% of the markets share,
followed by Unilever 40%
 The other Tea manufacturers only hold 4% of the markets share which reflect that how difficult is it to
penetrate the market.
 It also highlights the fact that Tapal and Unilever market shares represent the major chunk of the
consumer base.

Input:

Tapal Tea must sustain the market share but explore new markets to avoid internal cannibalizing amongst its
existing brand.

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Market Structure of the Company

Masses Masses Arm forces and their

Masses
End Users Bulk buyer Shoppers families
Price sensitive Price sensitive Foreigner Consumers
Convenient buy
B2B Satisfy Tea drinking
Contracted supply
Product B2C needs
Discounted Price B2B
Application Profit margin on bulk
Discounted Price
B2B
buying B2C
Economy Packs
Mixture
Mixture Mixture
Leaf Leaf
Product Dust
Leaf Leaf
Dust Dust
Iced Tea
Vendor/contractor
Owner
Govt. Officials Finance Dept. Govt. Officials
Influencer Finance Dept.
Proprietor
Administration Dept. Finance Dept.
Consumer
Family Monthly Budget
Traders
Retailers Contractual Restaurants,
Whole sellers Hotels/Cafes, Offices
Restaurants supplies Procurement Dept.
Purchaser Procurement Dept.
Hotels/Cafes Portion of Foreign Distributions
Corporate Offices Traders/wholesalers
Banks Family Shoppers
Educational Institutions

USC/CSD Distributors Modern Trades Armed forces &

[General Trade/Wholesale [MAKRO/METRO] Export Channel
Out Of Home]

The Manufacturer

Synopsis:

 In the Tea Industry, the key player in the distribution structure is “the Distributors”. These distributors are
basically hired by companies. These distributors are further cover whole sellers and retailers, as they
custodian of their respective areas defined by the company.
 International Modern Trades are the next sales drivers in the FMCG industry but may damage the
distributor or attract the company direct distributions
USC/CSDs are also playing an important role in the market but its dependency on Govt. grant would have a
substantial impact on its operations.
 Armed forces is a niche segment but contributing a portion of the cake.
 Rate of Exchange due to Export market supports business.

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Market Size - Past four years – Qty (Tons)

*All in Ton

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Market Size - Past four years – Value (in ‘000)

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 2005-06 2006-07 2007-08 2008-09
Rural 100,395 103,771 107,397 111,175
Loose 57,564 59,729 61,155 62,462
3.8% 2.4% 2.1%
Branded 42,654 44,101 46,182 48,744
3.4% 4.7% 5.5%
Urban 47,245 48,833 50,540 52,317
Loose 12,748 12,956 13,186 13,456
1.6% 1.8% 2.0%
Branded 34,674 35,854 37,301 38,825
3.4% 4.0% 4.1%
Grand Total 147,640 152,604 157,936 163,492
Loose Total 70,312 72,485 74,300 76,332
Branded Total 77,328 80,119 83,636 87,160
*All in Ton

2005-06 2006-07 2007-08 2008-09

Sub Total 50,381 52,425 54,667 57,123
Dust Rural 34,007 35,387 36,900 38,558
Urban 16,374 17,038 17,767 18,565
Sub Total 80,476 83,051 85,796 88,541
Leaf Rural 54,321 56,059 57,912 59,765
Urban 26,155 26,991 27,884 28,776
Sub Total 16,532 16,716 16,851 17,021
Mixture Rural 11,159 11,283 11,374 11,489
Urban 5,373 5,433 5,477 5,532
Grand Total 147,640 152,604 157,936 163,492
Total Black
Rural 100,395 103,771 107,397 111,175
Tea
Urban 47,245 48,833 50,540 52,317
*All in Ton

Synopsis:

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  The overall Tea industry has been growing gradually both in terms of sales and revenue.

 Branded Tea segment is showing healthy growth especially in rural markets where as market is gradually
saturating in urban area.

 In the Tea Industry, Dust and Leaf has a major chunk of the Tea industry in terms of Black Tea. However the
dust category is now become 2 nd most demanding brand and has been continuously increasing among the
core tea users especially in rural areas because of two major concerns as:
1. Per capita income has been increased which caused in increase of Tea consumption with the
growth in the population rate.
2. people are serving Tea as an economic point of view and with draw from the serving of cold soft
drinks to their guests as an expensive drink
3. Bottom of Pyramid market

 In Mixture category which was the legendry brand of the time and initially blended by Tapal when first
started its business in Pakistan is now either being matured or cannibalized by other brand.

 Green Tea has developing bit-by-bit as the health awareness level gradually build in the mind of the
consumers. This segment is very niche as the consumption pattern has restricted consumer with the diet
planning, health issues and exposure to particular social class.

 Iced Tea portfolio has yet to be waited for the acceptance from consumers as the brand is premature for
the industry and need few more years to be established.

Input:

Overall the industry has natural growth with respect to the Population growth rate. Therefore, good pricing strategy
related to bottom of pyramid market i.e. Rural Market could capture more returns for the company as well as
market share. However Green Tea and Ice Tea needs to be milking to sustain their growth.

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Market Size - Next four years – Volume (Tons)

Assumptions for Growth

Dust Tea Segment

Rural population is continues growing in Pakistan and hence the market size is increasing proportionally as the total
area expending and regular Tea consumption of the people has also increased. Since the Dust category is the
flagship brand of this market hence the demand has been increasing at the average rate of 3.3% each year.

Leaf Tea Segment

There is a pilgrim shift in the economy of Pakistan which has stretched the middle class upward as a consequence
more and more consumer switch to this premium brand. In Pakistan, the growth rate of Leaf is around 2.5% this
year which is the highest growth in last 5 years. Teabags are the major revenue generators in the Leaf category in
the local urban and international markets providing high contribution margins to business.

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Mixture Tea Segment
This category is reaching at its maturity stage but in last decades it was a primary brand of the market. Also one of
the major reasons of down this brand is low price gaps between the category brands which stimulate the
customers to switch on other brands

Green tea Segment

People have become health conscious today and would want to prefer green tea over the traditional black tea but
this category has a niche segment so would take time to build in future. As the literacy rate is continue to increasing
in Pakistan therefore more growth is expected in this category.

Iced Tea Segment

Due to climatic conditions, where the weather of Pakistan is mostly hot; consumers would prefer soft drinks over
tea but due to low awareness level this segment would take couple of years to build the market as the youth has
been moving towards the healthy lifestyle and trend lovers in urban areas.

Input:

Tapal must sustain its current position in the industry but strive to capture the share from the competitors and
Loose Tea market by offering good value for money to consumer at every price point. Women are the key part of
the overall Tea purchasing and making so targeting this gender and rewarding would be effective for Tapal to grab
the market share.

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Product Life Cycle

Product Segment Introduction Growth Maturity Decline

DUST ***
Mezban Dust +++
Pearl Dust/Redrose ++
Royal Dust +
LEAF ***
Danedar +TB +++
Tezdum ++
Supreme ++
LYL + TB +++
Vital Chai +
Tetley World +
MIXTURE ***
Family Mixture +++
Vital Chai ++
Tetley World + TB +
GREEN TEA ***
Shades of Green ++
Lipton Green Tea +
ICED TEA ***
Tapal Ice Tea Powder +
Lipton Iced Tea +
Nestea +

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 Competition Growth matrix
SEGMENT
COMPETITION
OVERALL
DUST LEAF MIXTURE GREEN TEA ICED TEA
(in Ton)
Jasmine TB
Danedar
Mezban Dust Family Lemon TB Tapal Ice
Tapal Tea DD TBs 33,000
Chenak Dust Mixture Elaichi TB Tea
Tezdum
Gulbahar
LYL packs
Pearl Dust Clear Green Lipton
Unilever LYL TBs - 32,000
Red Rose (Mint + Lemon) Iced Tea
Supreme
Tetley World
Clover Pakistan Royal Dust Tetley World - - 3,000
Tetley TBs
Surhan Dust
Eastern Tea Vital Chai Vital Chai - - 4,000
Dawn Dust
Historical Growth 4% 3% 1% 4% 9% 3%
Projected Growth 3.4% 2.6% 1% 4.8% 22% 3%
Company Profitability 6% 7.5% 3% 10% 13% 6.6%

Synopsis:

After analyzing the market for its capacity and its segmentation, we have come up with the following findings:
 The Tea Industry is directly influenced by the changes in the economic factors and stability
 Each segment has its own stimuli or functionality which affect the product demand especially Dust
segment is penetrating in the urban areas of upper Punjab and has a greater influence on the other
variants.
 The change in prices and margins has a direct impact on the sales of the segments
 Tea consumers in market greatly rely on strong brand name and reputation created over the years.
 Iced Tea segment is still premature concept in Pakistan but the trend would be more favorable in future for
this category.
 Each company has a set target market in which it capitalizes but now they are doing guerilla warfare
strategies to capture more share in the market.
 Mixture category must clarify its positioning to sustain in the market.

Input:
 Growth in Dust, Leaf and Green Tea Segments

 Mixture is facing challenges as of being approaching maturity so preemptive action would be taken to
avoid lose of positioning and cannibalizing.

 Green Tea has a huge potential of longevity but more variants to be launched in order to sustain growth

 More and continuous investment would required to develop the Ice Tea market and opportunity to launch
new variants

 Low cost leadership would improve the pricing strategy

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Porters Five Forces Model
Threat of New Entrant

Ever rising number of Mushroom Tea products is new entrant in the Pakistani Tea industry and are threat for the
other three key players in the market namely:

 Tapal Tea Private Limited

 Unilever Lever Pakistan Limited

 Eastern Tea Private Limited

 Tetley Clover Pakistan Limited

Pakistan is truly a rare land, home to different civilizations and diverse cultures. The industry is dominated mainly
by four companies, Tapal, Unilever, Eastern Tea and Clover Pakistan in this very order. As we have already discussed,
Unilever capitalizes on its strong hold as the Multinational Giant in the FMCG market due to its multiple product
lines in the segments and their low prices. Tapal Tea on the other hand does directly compete with Unilever at the
Tea base since it has only Tea manufacturer. The main competitors of these companies are Loose Tea (smuggled)
markets i.e. Mushroom Brands, which has been successfully operating in the rural markets especially on price
packs. We have discovered that the consumer is not ready and willing to pay price for a cup of Tea that is only
affordable. Tapal Tea needs to come up with a differentiation strategy to put up a fight with Loose Tea which is
projecting a low priced. Tapal Tea needs to bring down its price in order to make the consumers shift from Loose
Tea or other branded Tea without compromising quality.

Bargaining Power of Buyer

In case of Tapal the bargaining power of Buyer is low because the there are so many distributors in Pakistan and
Tapal has a wide range of options to choose.

Bargaining Power of Suppliers

In case of Tapal, Supplier’s bargaining power is high because there are many distributors available but the market
has limited number of suppliers.

Rivalry between Competitors

There is an intense rivalry among the competitors, as the market has a lot potential, which can be observed by the
entry of two new competitors in the tea market in the last five years i.e. Clover Pakistan & Eastern. However, the
main competition and rivalry is among Unilever & Tapal. Both are always trying to capture each other’s market
share and in the recent retaliation strategies from Tapal have been fruitful.

Threats from Substitutes

Coffee is a substitute for tea as both fulfilling the core need of refreshment. In the category of coffee Nescafe has a
lion’s share and it is an indirect threat of substitute for Tapal because in the winter season people usually prefer
coffee over tea.

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Environmental Factors

Technological
Technology is also harnessed at Tapal to benefit the consumer. Tapal was the pioneer in soft packaging and round
tea bag. They imported this innovative technology and established a fully automatic facility under the guidance of
their founder, Adam Tapal, where soft packs were produced for the first time in Pakistan. Few years back Tapal has
improved the technology to hard packaging. At this facility tea is blended and packed in hygienic conditions,
untouched by human hands whilst the hard packing technology keeps tea fresh and packaging costs economical.
The success of these hard packs has been such that other tea companies have also followed Tapal's lead and
launched some of their brands in hard packaging.

Political
The political & legal forces that affect Tapal are the taxes & excise duties levied on Tapal’s products and its imports.
Also it has to fulfill all the rules and regulations as per law.
Fluctuation in the import duties by federal government is an issue of great concern for all tea-marketing
companies. If we look back in past, tea imports during 2004-05 increased by over 10 percent compared to 2003-04
mainly due to a cut in the import duty, the federal government in the budget 2004-05 cut by 50 percent the import
duty on tea, bringing it down from 20 percent to 10 percent to what it said protect the local industry and curb the
menace of smuggling. This decline resulted in more production and Tapal discovered a new market for herself and
started exporting its blend tea. Right now Tapal is exporting tea to some of the countries abroad like Canada, Saudi
Arabia, and Dubai. Illegal imports are substantial, nearly 1/3 of domestic consumption and an 81 million USD
business. Tea smuggling is a matter of great concern. The government loses huge money in import duties and
domestic importers face tough competition from those who are instrumental in bringing back tea meant for
Afghanistan. Most is Indian low-grade bulk tea transported through Afghanistan and sold bulk in markets in the
towns near the Western border.
The trade is growing, 48,000,000 kgs, were brought illegally into the country during FY06 and 40,000,000 kgs, in
FY05, a 10 percent increase. Legal imports declined 12.5 percent in the same period.

Economic
Another major factor that affects Tapal’s marketing strategy is the conditions prevalent in the economy. The main
economic forces affecting the market are:

Stage of Business Life Cycle

Whether the economy is in a recession or in a boom, it affects the activities of Tapal in a way that it influences the
demand of their product. In a boom the demand of the product increases. Similarly, in a recession the demand of a
product falls since the buyers consume less of the product due to falling incomes. Though fluctuations in the
demand do occur, these are not major fluctuations as demand for tea is inelastic in relation to price.

Inflation
Inflation plays a major role on the marketing strategies used by a company due to two main reasons.
Firstly, inflation affects the consumers’ psychology and they become more selective in their purchases.
Secondly, inflation results in rising prices for the raw materials purchased by Tapal, which in turn
increases the cost of production. This factor plays a major role especially if the increase in cost cannot be
transferred to the consumers in the form of raised prices.

Social and Cultural Forces

Society and culture plays an important role in determining the marketing plan of Tapal. Consumer adoption of a
product depends greatly on the target markets beliefs, tastes and values of the people. For instance, Mezban tea
was developed as a stronger tea keeping in mind the taste of the consumers of interior Sind

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Company and Competitor Analysis
Making a modest beginning over half a century back, today Tapal has become the largest, 100% Pakistani owned
Tea Company in the country. It 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. He was the first to
introduce soft packs in the country. He developed an entirely new brand and category- Tapal’s Family Mixture (the
mixture of tea & dust). Mr. Aftab Tapal was the first to invent the highly successful brand Danedar Leaf Blend . In
December 1997, Tapal Tea became the first Pakistani Tea Company to earn the ISO-9001 certification: a symbol of
the highest international quality standards. Again in December 2000, Tapal acquired the ISO-9001: 2000
certification, making it one of the first few companies in the world to achieve this milestone. In addition to the
standard requirements, the ISO-9001: 2000 certification system includes requirements for environment
improvement, concepts of TQM (continuous improvement) with major emphasis on consumer requirements and
satisfaction.

Tapal’s success has left many astounded. No magic formula however, lies behind its growth other than hard work,
dedication and of course unique blends and better quality.

Competition in an industry is of four kinds

 Product form competition
 Product category competition
 Generic competition
 Budget competition
In the case of Tapal we would be considering the following competition that is:

Product Form Competition

In case of Tapal product form competitions are:
 Brokebond Supreme
 Tetley tea
 Lipton tea
 Vital Chai
 Surhan Dust
 Mushroom Tea

Product Category Competition

In case of Tapal product category competition would be:
 Danedar Kenya BP
 Mix Pat
 Super PFI
 Brazil Green Tea
 Bangladesh Green Tea
 Lemon Grass
 BPI (Indonesia)
 Kenya Mix Tea
 Kenya Dust
 F-1 Kenya
 Green Tea (Indonesia)

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Generic Competition
In case of Tapal the Generic competition comprises of:
 Nestle Instant Coffee
 Nescafe Coffee
 Mineral Water
 Cola
 Cadbury Coffee
 Lipton Ice Tea
 Juices and soft drinks

Budget Competition
Incase of Tapal the Budget Competition is:
 Restaurants
 Hotels
 Offices
 Educational institutions
 International Modern Trades
 Cafes
 Airlines
 Arm forces
 USC/CSDs

Distribution Structure: Shift from 2008 To 2012

%
Tea Market
2008 2012
DISTRIBUTOR 65 50

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 MODERN TRADES 7 20
USC/CSD 10 7
OOH 18 23
100 % 100%

Synopsis:

 Distributors will divert themselves towards the large retail stores as the margins are continuously cutng
off so the Tapal Tea outlets coverage would be tougher than before.

 Introduction of the Modern Trades in Pakistan would influence the distribution and other local
government subsidiary chains as of more convenience factors and volume share by offering memberships
and freight cutoffs.

 Tapal has been improving the OOH structure to capture the opportunity in the future.

 Utility Stores has dependency upon the Government subsidy if the policy changes they could be having
great impact on the market.

Input:

Tapal should reduce the cost of operation and logistics to not only retain its current distributions network but also
minimize the margin gaps amongst the sales sources.

Distribution Shares And Company’s Positions (2008)

ALL PAKISTAN COMPANY’S #1 COMPETITOR’S OUTLET

%
DISTRIBUTION TURNOVER SHARE TURNOVER SHARE COVERAGE

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DISTRIBUTOR
60 70 60 65
(GT/WS)
MODERN TRADES 7 10 15 90
USC/CSD 18 15 15 75
OOH 5 5 10 25

o The only change in the last 4 years is the introduction of IMT (International Modern Trade) with their
regional placement and presence at key transaction centers.
o The distribution structure of Tapal Tea and Unilever is comprised mainly of “distributors”. The total
number Tapal’s exclusive distributors are approx 435 distributors covering 114,000 outlets across Pakistan.
However, Tea is also being channeled through various other channels in order to reach to end consumers.
o Distributors are the institution through which availability of products is possible across the retail trade.
Tapal’s exclusive distributors have a very good relationship with them. The important thing is that they
must integrate into total marketing mix because of time and money required to setup an efficient channel.
o Whole sellers are very dynamic in their demand as they try to find the better option and direct reach the
Modern Trade channels.
o The company’s turnover share through, distributor & direct is 70%, & 30% respectively.
o The outlet coverage is almost 85-95% in South but 65% in North.
Where,

o GT= General Trade (general stores, Kiryana stores, Medical and General stores)
o IMT= International Modern Trade (departmental stores/Hyper Market such as Makro)
o Whole seller- is route to direct to the rural areas and offered quantity discounts
o USC=Utility Stores corporation – Govt. subsidized shops
o CSD=Canteen Stores Department – Cantonment subsidized shops

Input:

 Further expansion in the distributions to increase coverage and reach more consumers and market share.
 Heavy investment in the marketing promotions in OOH sector can build strong and long-term relationships
with the corporate businesses and other complementary goods manufacturers.

Top 7 External Trends

Taking advantage

Trend Potential Impact We C1 C2 C3

Growth of rural markets of Sind
Increasing competition, price erosion,
and Punjab; focus of companies on Yes Yes Yes Yes
market share
this area
Manufacturing Cost Increase Cutoff Profit and margin No No No Yes
Teabag Growth Opportunity, high profits Yes Yes No No

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 Influence on sales and marketing
Digital communication Yes Yes Yes No
Promotions
Population growth Market share increases Yes Yes Yes Yes
More demand of Green Tea as an
Healthy Lifestyle and awareness Yes Yes No Yes
Health benefit indicator
Low ROI, budget constraint ,
Customer/Trade Credit Policy No No Yes Yes
More receivables

Synopsis:

 Since the industry is on the growth as population expansion in Pakistan especially in rural areas so the
arrival of new entrants has major impact on the industry.

 Tea prices in international market are randomly increasing in a fiscal year which caused cuts n profitability
in major brands.

 Since the SEC classes have been stretching towards the upper middle level therefore the demand of the
premium product has increased as well as price products in lower middle.

 This industry is still following the conventional rules of communication therefore no company yet entered
in this strategy.

 Tea has become a national drink of Pakistan and has more preference over other beverages especially in
rural market which is contributing 66% of the total population of the country. As a consequence, the
market size is continuously increasing so far caused more consumption of tea.

Input:

Focus on the cost reduction, managing healthy brands, compelling brand communication and product innovation.

SWOT Analysis

Strengths
1. Company name image –1st National Tea Company
2. Highly experience Sales staff + exclusive sole distribution network
3. Efficient production capacity
4. Expertise – Tea Blending.
5. Economical pricing strategy
6. Short term credit policy i.e. efficient ROI

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Weaknesses
1. No customer complain center within the company.
2. Limited budget and investment in the business
3. Weak coverage in upper northern areas of Pakistan
4. high Price gaps between product line
5. Single product manufacturing company i.e. just Tea
6. No specified R&D department

Opportunities

1. Growing rural market and export

2. Initiatives in price pack category as to capture value from price sensitive customers
3. Newer segments introduced with entry of new brands which still have huge potential for growth
4. Central and upper Punjab has tremendous potential for growth and profitability
5. Competition is still weak in south coastal areas
6. Tea prices are become high in gray/loose tea market
7. Green Tea market is growing because of health awareness programs

Threats
1. Abolishment of Subsidy given by Govt. on Tea Import
2. WTO (World trade Order) opening local markets for global competition.
3. Competitors launching newer brands with high margins at reduced price for our price-sensitive economy
proving serious threat in near future
4. Increase counterfeit and IP issues
5. Attraction for new entrants in the industry
6. Complementary goods are going more and more expensive then before i.e. Milk, Sugar etc.

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Cross Matrix Analysis
Opportunities Threats

1. Growing rural market and 1. Abolishment of Subsidy given by

export
2. Initiatives in price pack
category as to capture value
from price sensitive customers
3. Newer segments introduced
with entry of new brands which
still have huge potential for
growth
4. Central and upper Punjab has
tremendous potential for
growth and profitability
5. Competition is still weak in
south coastal areas
6. Tea prices are become high in
gray/loose tea market
7. Green Tea market is growing
because of health awareness
level
Strengths O1,2, 4 & 5: S2, 3, 4 &5
Govt. on Tea Import
2. WTO (World trade Order) opening
local markets for global
competition.
3. Competitors launching newer
brands with high margins at
reduced price for our price-
sensitive economy proving serious
threat in near future
4. Increase counterfeit and IP issues
5. Attraction for new entrants in the
industry
6. Complementary goods are going
more and more expensive then
before i.e. Milk, Sugar etc.
T1,2:S1,5 & 6

1. Company name image –1st High Potential Ability to resist

National Tea Company with
recognized brands O6:S1&5 T2,3 & 5: S1,3,4 & 5
2. Highly experience Sales staff +
exclusive sole distribution Increase Market Share Ability to resist
network
3. Efficient production capacity O7:S4
4. Expertise – Tea Blending.
5. Economical pricing strategy Segment Growth
6. Short term credit policy i.e.
efficient ROI
Weaknesses
O4:W3 T6:W5
1. No customer complain center
within the company. Hire new distributors High Risk
2. Limited budget and investment
in the business O2:W4 T5:W3
3. Weak coverage in upper
northern areas of Pakistan More customer switching Market Saturation
4. High Price gaps between
product line T3:W2
5. Single product manufacturing
company i.e. just Tea Price wars
6. No specified R&D department.

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Value Chain Model
Human Resource Management
Tapal's management philosophy is based on the traditional values of the Tapal family; values that were based on
good business sense such as establishing a tea-shop in the business area of Jodia Bazaar. This mix of tradition and
innovation has become the hallmark of the winning Tapal strategy.

The company is managed by a dedicated team of highly qualified and experienced professionals with diverse
experience. Some of the key features of the management philosophy are:

 Accessibility-Open Door Policy

 On-Going Training & Development
 Discipline & Respect at every level
 Participative Management Style
 Performance Appraisal System
 Excellent Employee Compensation

Technology Development

Tapal is always striving to install the most innovative technology in their firm. In the production, Tapal has Hesser &
Sohrab machines require less human requirement and whole work is automated only the finished product are
packed in cartons by the workers. Although Tapal can automate this process too but in this case workers working
their might loose their jobs.

To record the attendance of employee and to enforce the punctuality there’s a machine on the entrance of the
factory where every employee has to put his/her finger and enter ID card number and their arrival time will be
recorded. Human Resource department has software through which they maintain the leaves encashment record
along with full information about every employee is maintained. If an employee wants a leave on so and so date
he/she must access the server and send an email to the HR executive and the confirmation will be delivered to the
employee.

The software we really impressed with is the Oracle software used in the sales department to dispatch orders to
distributors. In this oracle software they have record of every distributor and its zone, town, territory. We search
the customer name and then book new order. In the new order-booking format there is a table, which is divided in
to following columns:

In this process they call the number of stock requested by distributors in the column of quantity reserved. If the
stock is not available an alert message will prompt on the screen and then the sales executive on his own discretion
allocate the items to distributors. This system is centralized by the warehouse database so you get the updated
information about the stocks.

Procurement
The procurement of tea is dealt by Tea and Blend department. The purchase of tea takes place in two ways: on an
auction and on a private offer basis. In a private offer the tea gardens send samples to different tea industries.
There are no bids and no auctions. The same procedure is carried out in checking the tea samples. However in a
private offer the purchase is made on the SAS basis i.e. subject of approval of sample. If the sample is approved by
the tea tester then the purchase is made. Incase of a rejected sample a replacement is made of another kind of tea.

In both cases that are the auction and private buying, after the purchase is made a purchased sample is sent which
is again checked to confirm the authenticity of the tea and when the tea batch that actually comes in after
shipment is also tested to confirm it is the same tea without anything wrong in it.

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Primary Activities

Inbound logistics
The raw material for tea is provided mostly by Kenya. The Tea and Blend department initiates the whole process, be
in touch with the suppliers in Kenya. The purchase of tea takes place in two ways. On a auction and on a private
offer basis. In an auction what happens is that all major tea producing and exporting countries send catalogues and
samples of tea to major tea industries around the world. These samples are tested on various aspects of taste,
color, aroma and many other aspects. The samples that are approved by the tea testing people are bought in the
auction. The auction takes place every week in a major city of the tea exporting country e.g. in Kenya it takes place
in Mombassa, in Srilanka it takes place in Colombo. Tapal has representatives in all these major tea exporting
countries who buy tea in the auction on behalf of Tapal.

Operations
The testing procedure is as such that the samples are displayed first. In front of the samples is a cup which has that
specific tea in it. All teas are brewed in the same manner with the same amount of contents for the best result. Tea
tasting team tastes all the tea and comes to a joint conclusion. The tea which is selected is then bought in an
auction or a private offer. There is obviously a lot of samples coming in every week and lot of purchases being
made. Thus to keep a record of all such purchases and samples Tapal has prepared a software called the Raw Tea
Inventory. This software keeps record of all purchases, samples, tea gardens, country and the person selling tea. We
were astonished to know that the tea department tastes about 500 cups a day.

Outbound Logistics
The outbound logistics in the south region is provided by the Al Mohammadi Enterprises, a renowned and old
customer of Tapal.

Relative Importance of Factors

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 Absolutely Very Quite Nice to Not Don’t
Factor Number Critical Important Important Have significant Want it
5 4 3 2 1 0
Price Competitiveness Yes
Product Innovation Yes
Product Quality Yes
Financial Performance Yes
Market Share Yes
Availability of stocks and
Yes
Outlet Coverage
Customer
Yes
service/support
Marketing
Yes
Communication
Manufacturing Cost Yes
Suggested Definitions:

Absolutely Crucial: Overrides most other considerations, wouldn’t consider supplier who doesn’t perform on
this factor.
Very Important: One of the first things we ask for, but we may be prepared to negotiate on it.
Quite Important: A negotiable item, but one when we attach considerable weight to.
Nice to Have: It could make the difference in a division, but is normally taken into account last.
Not Significant: Not normally taken into account at all.
Don’t want it: Would prefer a product without this feature

Synopsis:
 The key issues identified were the Manufacturing Cost, Price and Quality. We are already aware that the
Tea prices are touching sky high and consumers are becoming very price sensitive in purchasing Tea for
either further selling or personal consumption. Tapal is already working on horizontal integration, improve
the technology, cost minimizing and optimal production capacity utilization.
 Another key factor is the market share which can be achieved through extensive coverage.
 The booking time and delivery is a major cause and concern of the customer which may shift the customer
to other brands. The current delivery period of Tapal is every alternate day when booked an order which is
a great concern of product availability.
 The customer service is not a key requirement for the company as it has controlled by the field force. Since
Tapal has a diverse network of distributors the general consumer base does not go too deep down into the
complain requirements.

Input:

Price is the heart of all factors for the consumer to choose any brand. However, good quality, packaging and
performance also play as a catalyst for purchasing decision.

Rating Against Customer Buying Criteria

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 This
QUALITY & PRICE Business
Comp A Comp B
Non Price
Attributes affecting WEIGHTAGE
Customer Choice %
PRODUCT RELATED 80%
1. Quality 30 9 9 6
2. Color 10 8 8 6
3.Aroma 20 7 9 5
4.Brand Image 10 8 8 5
5.Taste 10 9 9 8
SERVICE RELATED 20%
1.Customer Complain Service 10 4 8 3
2.Availability 10 8 8 2
TOTAL 100% 53 59 35
Has quality gone up/down (+/-)In
Up Same Down
past 4 years

Relative Price today (Rs.) 460-499/Kg 490-550/Kg 400-470/Kg

Relative Price 4 years ago 260-370/kg 280-385/Kg 240-370/Kg

Rating Scale: 1 – 10
1 = Very Weak 10 = Very Strong

This
QUALITY & PRICE Business
Comp A Comp B
Non Price
Attributes affecting WEIGHTAGE
Customer Choice %
PRODUCT RELATED 80% 6.6 7 4.7
1. Quality 30 2.7 2.7 1.8
2. Color 10 0.8 0.8 0.6
3.Aroma 20 1.4 1.8 1
4.Brand Image 10 0.8 0.8 0.5
5.Taste 10 0.9 0.9 0.8
SERVICE RELATED 20% 1.2 1.6 0.5
1.Customer Complain Service 10 0.4 0.8 0.3
2.Availability 10 0.8 0.8 0.2
TOTAL 100% 7.8 8.6 5.2

Inference:

After analyzing the customer preference and buying requirement we can safely conclude that:

 The product constitutes 80% of the customer requirement i.e. customer is more concerned about the non-
price factors which include the brand Image, Quality, Aroma, Taste and Color.

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  Tapal plays a good role in quality attribute and have brands to satisfy varied consumer needs.

 In the Service criteria the customers is more interested in the availability and complain service. Tapal is
weaken in customer complain area where the Unilever has a separate unit for that so if Tapal covers up
this area then surely would have an edge over the rivals.

 The main issue which needs to discuss is rapidly increasing product’s price that has already increased over
100% in last four years.

Input:

Improve the Aroma, quality and customer complaint services to break the clutter.

Impact of Issues on Strategic Profile

Company Consumer High

Product
Issue Name Credit $ Price Purchasing Manufacturing
Innovation
Policy Power Cost

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Customers +++ ++ +++ +

Market segments ++ + ++ +++ +

Products/Services ++ +++ +++ +++

Strategic Management +++ ++ +++ +++ +++

Operations (Production/Logistics) + ++ +++

Technology +++ +++ +++

Distribution Channels +++ ++

Raw Materials, Energy + +++ +++

Organization Structure +++ +

+++ Critical ++ Very High Impact + High Impact

Synopsis:

Analyzing each issue we conclude that the company must focus on critical issues and regenerate their operating
strategies according to the changing purchasing power of the customer.

Input:

 Continues improving operation planning and optimize production cost at minimum level.
 Remove credit policy to improve ROI and hire self sufficient distributors who can easily invest.
 Low cost strategy would pass maximum benefits to consumers that improve their purchasing power
 Proper forecasting of demand and inventory management can reduce the impact of uncertain $ price
 Strong relations with supplier can reduce the $ price
 Value innovation would give competitive edge over rivals

Customers Buying Criteria: Price...%, Quality Attributes...%

Question Keep it up
its Cost
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Relative Performance Rating

Better Availability Taste

Color
Same Packaging Quality

Customer Complain
Worse Aroma
Service

Do not 10% 20% 30%

Sweat
Attributes Important to Customer

Input:
Improve
 Improve Aroma and customer complain services Fast
 Improve the quality to beat competition
 Expand coverage to provide convenience to consumers
 Build strong brand image through attractive packaging and win top of the mind of the consumer

Lower Cost Differentiation

Chenak Dust
The Five Generic
BroadCompetitive Strategies
Mezban Sachet
Tezdum 22gm
Gulbahar
Range of Family Mixture
SOG Selection Pack
Buyers Type
Danedar Twin Pack of Advantage Sought
Mezban Dust
125gm
Narrow
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Buyer MANAGEMENT
Tapal Special Teabag Page 36
Segment Tapal Ice Tea Danedar Round Teabag
or Niche
Inference:

Overall Low Cost Provider Strategy

This category comprises of Tea brands falling in the Dust and Mixture segments. These segments have been
dominated in Karachi, interior Sindh, coastal and thar belt by Tapal’s Family Mixture, Mezban Sachet/Packs, Chenak
dust and Denedar Twin Packs. The Tea manufacturers compete with each other on the grounds of price and
economy packs.

Broad Differentiation Strategy

This area has been competing on differentiation strategy with many customers choosing on the basis of getng less
for more. Tezdum competes in this segment on the grounds of 22gm and better brand image and Strong Taste.
Gulbahar is the only choice for making traditional Kashmiri Chai for consumers which has differentiation USP. SOG
selection pack offers all three Tapal famous Green Tea flavors i.e. Lemon, Jasmine and Elaichi to consumers who
seek multi offers on brands.

Focused Differentiation Strategy

This strategy has been only adopted by Tapal on Danedar Round Teabag which competes in the high end segment
of Lipton Teabags.

Best Cost Provider Strategy

The sole runner in this category is the Mezban Dust 125gm which provides value for money that has proved its
success in the product line in the sindhi cultural lifestyle.

Input:
Less for more, distinctive brands with sustainably growth and value to appeal larger buyer

Vision & Mission

The management and the employees of Tapal Tea (Private) Limited is committed to:

 Satisfy stakeholders and be a benchmark for Quality, Creativity and Ethical values in business

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  Achieve leadership in all the categories of core business and diversify in areas which compliment the core
business.

 Provide products and services that meet customers’ requirements, expectation and agreements relating to
all aspects of Tapal Integrated Management System.

 Define and update measurable objectives and continually improve the effectiveness and performance of
the Quality, Health, Safety, Environment, food Safety and IS Management system.

 Prevention of injury and ill health by continuously identifying hazards and reducing risks to people, facility
and business.

 Ensuring that the Tapal processes and products are environment friendly and do not contribute to
polluting the environments in any manner.

 Adhere to all applicable legal, statutory and other requirements that relate to Tapal products, services,
health and safety.

 Establish effective arrangements for communicating with all stakeholders throughout the food supply
chain regarding all applicable aspects of Tapal Integrated Management System.

Strategic Vision
To be a benchmark of Quality, Creativity and Value Innovation, achieve leadership in the beverage manufacturing
industry which compliment the core business

Strategic Intent
Making Tapal the premium choice of consumers not only in hot beverage segment but also in other correlated
segments.

Competitive Innovation
 Bring down the cost through horizontal and vertical business partners; optimize the production capacity to
meet the future demand
 Apply six sigma in complete business processes in order to attain cost leadership

Business Objectives and Targets

1. To maintain market leading position and increase the sales in North Region by 5% in 2010.
2. To strengthen the regional brands by brand building strategy
3. Seek out the areas where new products can be introduce to diversify the core business
4. Investing to increase production capacity, in order to meet expected demand in coming 5 years.

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 5. To increase localization by the end of 2011 in order to maintain and improve cost effectiveness.
6. To opti mize the introducti on of new products by developing products with new designs and
features for youngsters segment.
7. To broaden export functions and prove and maintain product existence in International markets.
8. Modernize the company’s operations by acquiring greater technical expertise.
9. Increasing field force and distribution network.

How?

In Short Term
 Through strategic partnership between vendors/suppliers delivering Raw Tea, packaging materials, and
machinery required to improve the efficiency of production assembly and simultaneously through lead
time management techniques such as maximizing stock delivery turnover.

 Through continuously train and development of the front line workers and supervisors to ensure to meet
the deadline and productivity.

 Implication of Total Quality Management Techniques such as constant checks in through every stage of
assembly line and final test passes through the professional test inspectors, generally meeting the
prescribed requirement standard set preferably by ISO- 9000 or other quality standard maintaining bodies.
The philosophy of doing it right the first time would be achieved through this method.

 This can be achieved through effective production processes and a strong link between the Logistics and
distribution spread in the market. An integrated system to be devised where by the vendor/supplier and
distributor would log in the details of the ordered product on the computer screen and the same would be
available to the company plant office. The plant office will start production; each level of completion can
be monitored through the intelligent system. This would ensure that the delivery process bottle necks are
reduced and also an MIS can be generated to observe the delays, reasons and even the frequency of
orders and preference. Subsequently a separate “SOP’s – Standard Operation Procedures” to be devised
which would contain the details and timing of production at different stages of production

 Seek out for avenues such as Tea could be manufactured cheaply on the local grounds rather than
depending on dollar price. The following measure would help slash the manufacturing cost on two key
risks, devaluation of local currency and unrealistic demand.

 Through organizing events such as road shows, attack plans, events organizing or more consumer
engagement programs to be carried out through brand building and promotional activities to appreciate
the brand hard core loyal.

 Integrated Complaint Management System with 24 hours Call Center facility for Tapal Customers facing
any complain to active resolving trouble like counterfeit, fake activities etc.

 Regular audit Schedule of surprise inspection team to test the measures, service and standards set up at
Tapal exclusive distributions centers.

 Constant Social Contribution and Environmental Reporting at Factory Site for the residents and workers
health and safety and following and obtaining the Ethical Modules requires by the authorities
(The above objectives pertain to the day to day business activity and need to be addresses on real time
basis. Any delay or slackness in the above would lead to business losses in terms of revenue and repute)

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In Long Term
 Achieve further capitalization and investment outlay production of more profitable segment and divest
non profitable business units. This will benefit the Tapal Tea by milking to more demanding segments and
production. Simultaneously Tapal will have to work out a strategy to reduce the prices of its above price
products as they have major share but also focus on the economy packs as volume drivers by consistent in
their supply, while entering into a new untapped markets.

 The positioning of the each segment would be such that it would compete with the Unilever and Eastern
Tea but would create an impression of better quality and value innovation without facing the internal
canalization. We expect that the customer can be drawn towards each segment even if there were price
war.

 A structured Resource program to be devised emphasizing on intellectual and technical skills that can be
made available in obtaining technology of specialized in manufacturing. This entity would achieve two
factors, firstly reducing considerable production cost and secondly exposing the company to an additional
market which can be supplied with desired profit margins.

 With the added stress towards environmental protection, CSR initiatives and Sustainability corporations
need keep themselves aware of the global developments. One such development is the discouragement
and discontinuance of wastages from the global impact scenario.

Segmentation Variable of the Consumer Market

Geographic
Tapal has divided its operations in to two regions namely:
South Region:
South side looks after the Karachi, Hyderabad and Sukkur.
North Region:
North side includes Multan, Lahore, and Islamabad.
Size of Southern Region
Karachi population size is 19,315,843 till 2010, area 4,227 km² (1,356 sq mi)
Hyderabad population size is 1,847,275.
Sukkur population size is over 1 million 5,165 km² (1,994 sq mi)

Size of Northern Region

Multan population size is 4 million (approx), area is 3,721 km² (1,437 sq mi)
Lahore population size is 8,896,000, area comprises to 1,772 km² (684 sq mi)
Islamabad population size is 805,000 (1998), area 906.0 km² (350 sq mi)
Density of Southern Region
Karachi 3,491.9/km² (9,082.5/sq mi)
Sukkur 175.9 persons/km²/km²
Density of Northern Region

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Multan 838/km² (2,170/sq mi)
Lahore 3,660/km² (9,479/sq mi)
Islamabad 880/km² (2,279/sq mi)

Climate
The climate varies as much as the scenery, with cold winters and hots summers in the north and a mild climate in
the south, moderated by the influence of the ocean. The central parts have extremely hot summers with
temperatures rising to 45 °C (113 °F), followed by very cold winters, often falling below freezing. Officially the
highest temperature recorded in Pakistan is 52.8 °C at Jacobabad. There is very little rainfall ranging from less than
250 millimeters to more than 1,250 millimeters (9.8–49.2 in), mostly bring by the unreliable south-westerly
monsoon winds during the late summer.

Demographics

Age: 20 – 60
Gender: Male and Female both
Family: Cohesion families
Occupation: Labor, Business man, entrepreneurs & self employed, student, farmer
Religion: Muslims, Hindus and Christians etc
Nationality: Pakistani

Psychographic

Social Class: lower, middle, middle-upper and upper-upper

Life style: Trendy, quality conscious, trying to differentiate themselves from others, family
belongings, Cultural and Heritage values, Pride, Patriotism
Personality: Elegant, simple, extrovert

Behavioral

Occasions: Ritual, meetings, evening get to gather, Breakfast or any social meeting
User status: Potential users, non users and hard core users
Usage rate: depend upon need and consumption
Readiness stage: intending to buy
Attitude towards product: Positive attude

Where customers buy:

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Tea is sold through two different places, one is the where customers directly buy the product from general retailers,
USCs/CSDs, Modern Trades and the second is the institution sales where customers (institutions) directly buy the
product from Tapal’s Out of Home Sales department (OOH) who directly maintains links with different institutions.

When customers buy:

The consumers usually buy Tea at the start of the month in bulk amount for family usage or when the Tea desire
strikes that can suffice them for that particular month or the commencing one too.

How Customers choose:

Customers choose Tapal through advertising, print ads, promotional schemes & word of mouth. Since it proudly
caters to the different tastes and preferences of people belonging to diverse lifestyles, Tapal Tea is the primary
choice of tea lovers nationwide.

Why they prefer a product:

As tea fulfills a core need of refreshment. Tapal’s brands remains favorite around the country with its grape-nutty
appearance, rich golden color and strong refreshing taste. In fact its popularity is such that other companies have
launched their own versions of these blends, but Tapal's remains the original and ultimate.

Strategic Canvas - Past & Future

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 High

Low

High

Low

Input:

 Exclusive distribution who have extensive market coverage and willing to invest more in the business
would increase the market penetration but the long term relationship must be maintain with value in
return.
 100% capacity utilization can reduce cost of production and thus offer competitive price in the market
 Social issues and CSR initiatives can strengthen the company image, customer preference, brand
positioning, attract more investors which would ultimately affect the business cycle.
 Company owned “Chai Shai Café” would give preemptive mover advantage in this business.

Cost Structure

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 S. No. Contents % contribution
1 Raw Materials and components consumed 86
2 Direct Labor 1.2
3 Technical director’s remuneration 0.01
4 Salaries, wages and benefits 1.6
5 Employees’ severance cost -
6 Stores consumed 1.7
7 Light, heat and water 0.8
8 Insurance 0.2
9 Rent, rates and taxes 0.05
10 Repair and maintenance 0.3
11 Royalty 4.08
12 Technical assistance 0.7
13 Traveling. Conveyance and entertainment 0.2
14 Postage and telephone 0.07
15 Printing and stationary 0.03
16 Vehicle running 0.03
17 Depreciation 3
18 Canteen 0.17
19 Newspapers, magazines and subscription 0.01
20 Staff training 0.04
21 Intangible assets amortized 0.011
22 Other manufacturing expenses 0.003
Total Manufacturing Cost 100%

 For Tapal Tea, highest value adding component in the total manufacturing cost is Raw material, i.e. 86%
which the company import from Sri Lanka, Kenya and Bangladesh
 Tapal Tea has reduced it costs, as compared to its competitors, buy changing it Raw material Supplier
source and auction. It purchases “premium quality” Tea from Sri Lanka, Kenya and Bangladesh. These
countries are relatively high annual Tea producer in the world.
 Cost effectiveness achieved by increased localization.
 Tea Companies are importing Tea fully from Sri Lanka, Kenya and Bangladesh which in actual increase
there costs tremendously as Tax. The end result for them is increased prices.

Input:

 Selection of Supplier on the basis of price competitiveness can reduce the major part of the production
Cost.
 Optimal capacity utilization of plant can reduce expenses
 Implementation of TQM can improve the business infrastructure and lead to cost leadership in all grounds

Pricing Strategy

 Unilever happens to be the trend and price setter for the whole industry. The other major player in the
industry, i.e. Tapal, Eastern Tea, Clover Pakistan and Loose Tea its followers.

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  These players generally follow the Cost Plus and variable methods for pricing. Fixed margin 3.36% and 5-
8% pass on Distributors and Traders respectively.
 Loose Tea has been smuggling through borders so mushroom players offer high margins to trade and
create tough competition in the market.

Input:

Both Low cost and differentiation strategies can give better pricing options to the company as well as to the
customers to create competitive advantage.

Legging Indicators and Leading Indicators

Leading & Lagging

Area of Focusing for
Indicators [Company is Projects/Activities done Impact on Results
tomorrow
focusing]

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  New brands for
 Increase profit and children and youth
Product development,
Introducing new brands market share  Tea bag markets
Blind Test and pre-
 New market  Diversification in Core
research has been done
development business
 European Market
 Health conscious
Increase sales and market
New flavors in Green Tea Product is in testing phase people
penetration
 Diet plans
 Children and youth
 Taking first mover who are trendy and
New variants in Ice Tea Lab test has done
advantage in the want social change
Powder Flavors have decided and
category  Instant
tested
 More revenues powder/energy Ready
To drinks
 Manufacturing Cost
would be optimized
TIMS unit has established
 Reduce the wastages
Implementation of TQM who will ensure the Kaizen and Six sigma
 Drop down Time delay
implementation of all implementation
in processes
areas
 Environment friendly
company
 Investment to be New machinery would be
Phase out SBUs having no Disposed off Ice Tea CAN utilized in milking purchased to cater key
profitability and Safari PF1 profitable brands demanding brands
 Warehousing Capacity
improve

Action Plan

Strategy & Action When &

S# Input Ref Pg# Results
Plan Where

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 To handle customer
1st QTR 2011- complains
Customer SWOT 29 Establish Customer Care
1 2012 Build trust of customers
Complain Center Strategy Canvas 32 Department
Karachi Regenerate the product
strategy
Hiring of new 4th QTR 2010-
SWOT 29 Seek efficient and Capture more market
2 Distributors in
Distributor Structure 26 experience distributors
2011
share
North North Region
Business growth and
Diversify Business Scope 09 Research new markets 1st QTR 2011 generate revenues to
3
Business SWOT 29 and opportunities Nationally milk the other business
units
Establish department or
Assumptions of
18 outsource the Market health indicators
R&D growth 2011
4 SWOT
29 consultancy to seek out
Karachi
and opportunities
Department 27 women cooking identification
Top 7 External Trends
behaviors
To capture those
New fillers in the SWOT 4th QTR
29 Market survey customers who are
5 existing product Competition Growth
20 Competition Analysis
2010
willing to pay at different
line Matrix Nationally
prices
Increase the sales
Visit International
2010-2012 volume and company
Markets and Tea
Export Market Business Scope 09 Mid East good will
6 Exhibitions to seek out
exploration SWOT 29
the demand and
European Increase Sales revenues
countries as difference in rate of
potential investors
exchange
Develop brands for rural
SWOT
11 market with high 1st QTR 2011- Enjoy the major chunk,
Rural Market Competition Growth
7 18 leverage of cost 2012 first mover advantage
penetration Matrix
29 Round Dust Teabags South Region and leadership
Market Share
launch
Introduce new unique 3rd QTR
Green Tea SWOT 29 variants in Green Tea by 2011-2012
8 First mover advantage
variants Top 7 External Trends 27 stretching health Nationally
benefits of having it
Build long term
Respond the uncertain
relationships with 4th QTR 2011-
SWOT demand of the market
Tea Suppliers 29 number of suppliers to 2012
9 Impact of Issues on Increase market share
relationship Strategic profile
35 grab the demand of Tea Srilanka
Charge Premium
and make difficult to Kenya
reach for competitors
SWOT
Strategy Canvas 16
4th QTR 2010- Reduce cost of
Market Size 29 Implement Full pricing
10 Pricing Strategy
Top 7 External Trends 27 strategy
2011 manufacturing and
Nationally enhance margins
Relative importance 32
Factor
Train the Sale force and Shelf share will be
Weekly 2011-
Availability of schedule to respond improved
11 Strategy Canvas 29 2012
Products productive calls on daily
Nationally
Increase sales and
basis revenues
Customer Buying 1st QTR
Tea Aroma and 35 Improve the blend of Capture competition
12 Criteria 2011-2012
Quality Top 7 External Trends
27 Leaf to enrich the aroma
Metro Cities
Brands share

13 Improve Mixture Market Structure of 10 Through Research, 1st QTR To take out form
Blend and clarify Industry 20 multiple blending tests 2011-2012 maturity stage and
its Positioning Competition Growth to improve the blend Karachi [initial sustain growth
Matrix Work on communication phase]

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 platform to reposition
the brand
Distinctive brand
communication to avoid
Brand 2nd QTR Build brand positioning
Market Share 11 cannibalization within
14 Communication
Top 7 External Trends 27 Tapal brands
2012-2013 and specify
Strategy All Regions segmentation
Specific marketing mix
planning for each brand
Competition Growth 1st QTR
Matrix 20 Implement TQM and JIT 2012-2013 Increase CM and price
15 Low cost Strategy Distributor Structure 25 to attain the low cost Operation & competiveness
Top 7 External Trends 33 leadership Production Increase Consumer value
Cost Structure plant
Increase firm goodwill
Find issue that best fit to and brand positioning
the business vision, Market share
Choose Cause 3rd QTR
mission and goals. Growth
16 and CSR Strategy Canvas 43
Select CSR initiatives that
2011-2012
Attract more financial
initiatives Rural Areas
fully support the cause investors and NGOs
and brands Publicizing the company
CSR

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