Tapal Tea Marketing

1
Management

MARKETING MANAGEMENT
GROUP MEMBERS
ABDUL MATEEN
MUBASHIR AHMED
OMER
SHAHRUKH MUSHTAQ
SYEDA TOOBA HUSSAIN

SUBMITTED
TO

NOMAN ASHRAF
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Management

TABLE OF CONTENT
• ACKNOWLEDGEMENT
• VISION STATEMENT
• SWOT ANALYSIS
• COMPETITORS SWOT ANALYSIS
• COMPETITIVE STRATEGY WHEN THE TAPAL BRAND
WAS LAUNCHED
• MARKETING ENVIRONMENT
• SEGMENTATION, TARGET MARKETING AND MARKET
POSITIONING
• CONSUMER BUYING BEHAVOUR
• PRODUCT
• PRICING
• DISTRIBUTION STRATEGY
• PROMOTIONAL STRATEGIES
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ACKNOWLEDGEMENTS

This report has been a great learning experience- helping us to learn about
the practical implications of marketing management, which is complex and
dynamic process.

We would like to take this opportunity to thank our instructor Mr. Noman
Ashraf who made this report possible by providing his unconditional
guidance and cooperation throughout the semester.

We also wish to express our gratitude to various Tapal employees who

generously helped us in compiling this report by sharing their expertise,
knowledge and experiences, without which this report would never have
been possible.
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Management

VISION STATEMENT

• To provide value and quality to our consumers, our aim is constantly to

provide world class service for our customers, deliver value for our
products and make Tapal is a great place to work for our employees.
We aim to have a reputation for innovative thinking in the areas that
matter to our customers

• To become a global brand.

• To be an innovative, marketing and research oriented company.

MISSION STATEMENT

To provide a value added service to our customers with quality, reliable, and
world-class service. Customer satisfaction is our number one priority.

OBJECTIVES

• To transform our competencies into the best advantage for our clients.
• To offer quality services with integrity, expertise and professionalism
to enhances
• our client's operation.
• To offer personalized services according to the clients need.
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Management

SWOT ANALYSIS
Strengths
The strength of the company would be the innovation and the high quality
products. Because of these the company is able to survive in the market
and still earning a good market share comparing to its competitors.

o Tapal is one company that is catering to the needs of all segments of

the society.
o Export
o Tea cultivation
o Strong R&D team
o Brand sponsored shows such as musical concerts and cricket
tournaments.
o Good brand awareness in the local target market.
o Danadar, Family mixture and wide range of veriety
o Karachi’s largest selling brands

Opportunities
One of the greatest opportunity that Tapal has its huge market which is
increasing as the population is increasing. Tea has become a staple
product in Pakistan which cannot be denied at 20 to 60 year of age.

o In the long run there is going to be a lucrative market for Ice-Tea and
flavored tea.
o The market growth of the tea-bag market because of it being easy to
use.
o Customers are more attracted towards strong taste and quality of tea
offered by tea providers.
o There are markets in Punjab, N.W.F.P and Baluchistan, which are not as
yet explored by competition.
o Duty free tea import from Sri Lanka and Bangladesh and India.
o Green tea market is growing.
o Research and development (Northern Areas)
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Management

o Exports ( USA, UAE, CANADA)

Weaknesses
No major weaknesses were mentioned by the authorities of Tapal but its
intense competition as our analysis is one of their weaknesses as to stay
alive against a giant as Unilever and the other one new entrant as Tetley.

o It is a major hurdle for Tapal to position its tea abroad in the minds of
the consumers and encourage them to indulge in brand switching.
o Have to import some of their products from other countries, which
increase their costs.
o Most of the sales are on cash, problem for the distributor then they can
switch to competitors.
o Tight quality control procedures lead to higher costs and its time
consuming and often discontent the suppliers.
o Tapal Safari Kenya leaf (wrong positioning)

Threats
One of the major threats that Tapal has it is its area of the market which
is not educated and it is using the loose tea which may not be good for
their health as well. Tapal claims that it is not possible for them to create
such a big awareness for them but the Government should play his role so
that these people should have some awareness of the imported loose tea.
o Strong marketing campaigns of Unilever makes it extremely difficult
for Tapal to counter-attack because of low budgets.
o Unilever as a more established brand name than Tapal world wide.
o High import duties encourage smugglers of tea to grow.
o The unstable rules and regulation of the government hinders the tea
companies.
o Due to climatic conditions, when the weather of Pakistan is mostly hot;
consumers would prefer soft drinks over tea.
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Competitors SWOT Analysis

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.

Lipton Yellow Label

Lipton was first introduced in Pakistan in 1948. The tea giant Lipton
was merged with Lever Brothers in 1989, five years after the
international takeover of the Lipton Company by Unilever Lipton Yellow
Label's main feature is that it is tea of the "finest blend" available. The
benefits offered by Lipton Yellow label to its consumers are "good
quality and good taste" since it is and international brand,

Brooke Bond Supreme

In 1997, Brook Bond, another leading player in the tea business in
Pakistan, was merged with Levers, so that Lipton and Brooke Bond,
once fierce competitors in the local market now belonged to the same
parent company. Brooke Bond had long been part of Unilever globally
but in Pakistan it remained a separate entity until 1997.

Tetley Tea
Tetley Tea is a product of Tetley Clover Private Limited, hoping to
capture six to eight per cent share in a market dominated by Unilever
and Tapal Tea. Tetley tea was due to hit the market in October 2003
but it had been delayed. The delay was caused by late shipments of
blending plant and machinery from abroad at Hub, Baluchistan. Lakson
Group and Tetley UK had entered into a joint venture investment of
Rs150-170 million in 2003 to form TCPL, a company incorporated in
Pakistan. Tetley Clover has planned to import tea from Kenya and Sri
Lanka due to good aroma and taste of tea of these countries and at the
same time Indian Tea might be used for blending.
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COMPETITIVE STRATEGY WHEN THE TAPAL BRAND WAS

LAUNCHED

OVERVIEW

Tapal tea is a perfect example of a gorilla brand becoming a market leader

through consistently improving themselves through different strategies and
creating value addition. When they started off in Pakistan they were doing
retail and whole sale business with shop in Jodia Bazar. With foresight Tapal
evolved formidable two –prone strategy maintaining and continuously
improving blending quality and dynamically pursuing brand building
exercises. So in this way they shifted from a well planned gorilla attacks to a
frontal attack which Brooke Bond and Lipton were unable to defend because
of being engage in fighting for there market share with each other, and
under estimating a brand which was few years ago a shop in jodia bazaar.

(that clearly demonstrates the real essence of marketing & war

that is THE unknown…meaning who is the enemy, where is the
enemy, how to find the enemy, how to beat the enemy before the
enemy gets over you ENEMY=COMPETITOR .)

Now Tapal is playing defensive strategies against Brook Bond who are
imitating their marketing strategies and they are attacking Lipton which has
reached a saturation point and that presents opportunities for Tapal to gain
control of that territory the Lipton has been able to manage.
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MARKETING ENVIRONMENT

MACRO ENVIRONMENT
Social and Cultural Forces
Society and culture plays an important role in determining the
marketing plan and business strategy of the organization. Although
Unilever and Tapal are big names and enjoy a very good market
share but still these forces sometimes play a major impact. Recently
when Muslims planned to resist against the foreign made goods it
could have greatly affected the sales of Supreme & Lipton Yellow
Label but at the same time this situation could have been good for
Tapal. These forces not always play a negative role but can
sometimes be really helpful.. In Asia society and culture does make
an impact.

Political and Legal Forces

The tea market is very much dependant on Political & Legal forces.
In other words we can say that Political & Legal forces can dictate
the sales and profitability of the Tea selling firms. Taxes and Excise
duty are of real importance to these organizations. The price of the
tea is to great extent dependent on taxes. On the other hand there
are several other requirements that the Tea selling firms need to
fulfill. For new entrant especially Tetley there would be many
Political and legal barriers.

Technological Forces
As far as Tea is concerned the Technological forces that may apply
are good machinery for refining and packaging. Tapal is considered
to be the pioneer in soft packing. Unilever is also up to the task as
far as packaging goes. Unilever and in my opinion Tetley will always
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have an upper hand and would be able to sustain the pressure of

bringing in new technological changes as they are financially strong
and have employees who love technological changes on the other
hand Tapal may initially cope up with these foreign firms but in long
run it will not be able to make constant technological changes.
Economic Conditions
Being a third world country and trying to progress Pakistan still
faces the problem of economic stability, recently it is believed that
Pakistan has been able to maintain economic stability.

Economic conditions play a major impact on tea industry. Like most

of the other industries are dependant on economy, tea is also one of
the industries that can be greatly affected by economic instability.

Whether the economy is in a recession or in a boom, it affects the

activities of Tea industry 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 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 Tea selling firms, 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.
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MICRO ENVIRONMENT

Distributors & Sales

The success of tea industry to a great extent lies in the hand of
distributors. Tapal, Supreme, Brooke Bond & Tetley share a very
much similar policies with the distributor. Unilever has the same
distributors for most of their product. The main distributors of
Unilever are M.Saya and Gizri Corporation. Tapal in Karachi has a
very big distribution network; it deals with ten different distributors
for the sale of its tea some of the distributors are Qiji Enterprise and
Sales Promoter. Tetley main distributors are Consumer Channel &
Express.

Competitors
The tea industry is divided into two segments. They are:
 Branded Tea
 Unbranded Tea
Tapal is facing a tough competition from both the segments as the
unbranded tea has almost half the share of the total tea industry. The
current tea imports are 140,000 tons. The major competitor for Tapal is
Lipton especially as the sales competition from this brand in the tea
industry is getting cut throat. Tapal is a clear market follower in all over
Pakistan as it caters to all the areas rural and urban alike. Lipton Yellow
Label is definitely a market leader claiming that it is a premium top of the
line product with “a sign of good taste”. But Tapal is the market follower
in branded tea.

However Tapal has countered this competition strategically by creating

positioning and brand pull in customers mind so that they have a separate
identity of their own. Catchy slogans like “JAISE CHAHO JEEO” for Tapal
Danedar, focusing on the free and radiant spirits of the youth which has
also been tagged along with “ZINDAGI MAIN BHARO NAYA RANG”.
“MUKAMAL GHAR MUKAMAL CHAI” is the slogan for Family Mixture, which
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positions on the completeness and togetherness of the family and

position Tapal as an integral part of the Family.

Suppliers
Tea industry is very much dependant on suppliers. Suppliers are
considered to be the heart of the Tea Industry. All the companies
like Tapal, Unilever and Tetley keep good terms with their supplier
since the shortages might be harmful for the company. These
companies have various suppliers and are not dependant on any
single supplier but still the supply chain needs to be very strong in
order to be in this competitive business.
Internal Public
Employees and labor unions need to be tackled with great care. Labor
unions are present in Unilever, Tapal and Tetley. All these companies
follow Industrial Ordinance that includes labor laws etc. Tea is basically
blended and packed in these companies. After suppliers labors play a very
important role in the progress of these organizations. Great care is taken
to provide laborers a good healthy working condition. At Unilever there is
a sports club for the workers. Tapal has plans to open up sports and
recreation club for their laborers.

Financial Public
These are considered to be the back bone of the company. All these
three companies Unilever, Tapal and Tetley have a good reputation
and can get loans both short term and long term as when wanted.
Teltey has a backing of Lakson group which is one of the biggest
and strongest business groups in the country. Unilever will have an
edge over all the other firms in getting cheap loans and better
service followed by Tetley and Tapal.

Government Public
The success of the Tea Industry at macro level depends on the
policies and budget decisions of the government. Taxes and General
sales tax are in the hand of the government, which are a major
threat to tea Industry.
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SEGMENTATION, TARGET MARKETING AND

MARKET POSITIONING
Mass marketing segmented marketing

Market Segmentation
• Distinct needs - regular tea/ green tea
• Characteristics – taste, aroma, strength
• Behavior – in terms of 4 P’s Segmentation of consumer market

Current Status Of Segmentation

There are two clear segments of consumers in the market, branded tea
consumers and un-branded tea consumers. In Sindh, branded tea is
consumed by most of the cities, whereas in the rural areas both branded and
unbranded are equally popular. In Punjab, the city dwellers as well as a
majority of rural areas are absolutely brand loyal while unbranded tea is only
popular in teashops and hotels. In NWFP and Baluchistan, 90% of the
population still prefer the unbranded form as it gives them the chance of see
and smell what they buy before paying for it. In addition, the mindset is such
that now no other tea brand can compete because consumers are strongly
brand loyal.

Tapal’s consumers can be segmented on the basis of income strata.

• Class A:
It consists of consumers who have disposable monthly incomes of Rs. 20k.

• Class B:
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It consists of consumers who have disposable monthly incomes between

Rs. 20k & Rs. 12k

• Class C:
It consists of consumers who have disposable monthly incomes between
Rs. 12k and Rs. 8k.

SEGMENTS

Geographic
Country region All
World region or country Pakistan
Density Urban, Rural
Climate Any
Behavioral
Occasion Any
Benefit sought Flavor, easy availability, brand status.
Loyalty status Significantly high
Readiness stage Conviction and purchase
Attitude towards product Enthusiastic, positive.
Demographic
Age 18-35.35-50,50-70,70&up
Gender Both male and female
Family size Nuclear family size
Family life cycle Young, single married, no children,
married with children
Income 8000 and above
Income group Middle, upper middle and high class.
Occupation White collar and service workers
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CONSUMER BUYING BEHAVOUR

Customers value those products whose targeting and positioning is done
effectively. Tapal being the market challenger has the main task to create
the value for its target audience. Marketers at Tapal need to have a close
look at what the consumers are actually looking for, at what price plus the
benefits through the sales promotions that it offers.

They closely monitor the buying behavior of the consumers, as how long is it
taking a consumer to make the decision and are they making a difference
between Tapal and the competitors’ product or not. Consumers buying
decision varies from product to product, Tapal is a beverage and some value
it as an important part of their lives while some just value it as a necessity in
the winters. It is basically a FMCG.

Tapal is a low involvement product and there are few significant differences
between the brands. It is basically a habitual buying behavior for the
consumers but for 10% of the consumers it is a dissonance-reducing buying
behavior.

HABITUAL BUYING BEHAVOUR

Tapal is a low involvement product and consumers don’t take much of their
time while making a buying decision. Consumers when buying a beverage
simply pick the one that they have been drinking since their childhood or
whatever has been going on around their house, there are no problems for
acquiring Tapal as it is available in all available shops. Consumers normally
do not search extensively for information while buying tea but the passive
recipients of information value their decision. The passive recipients of
information are repetitive ads that they see in television, magazines or
hearing it from others. This passive recipient of information creates brand
familiarity and this helps in molding their buying decision. Even though Tapal
follows under the Habitual Buying Behavior it has a high involvement, as
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there are many significant differences in the product as compared to the

other products. Thus it could also be applied for Dissonance-Reducing Buying
Behavior. Tapal is a dissonance-reducing buying behavior for those 10 %
consumers in the beverage market who had a bad experience with
competitors’ tea. Being dissatisfied with the competitors’ product they take
the decision of buying another product in the same category with much high
involvement.
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DEMOGRAPICS ACCORDING TO PRODUCT

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TAPAL Age Occupation Lifestyle End Users

Tapal
Danedar 25-65 House wives Housewives Households/offices

Tapal family Female who pride Households

mixture themselves in
25-50 House wives family values &
cohesiveness.
Tapal safari 18-30 Athletes Young, Athletes
chai adventurous &
energetic
individuals
Mezban 13-75 Housewives Interior Sindhi Dhabbas/
premier families who Households
dust pride in smooth
house hold
running, family
bondage,
hospitality,
'mehman
nawazee' &
quality servings
Tapal 18-35 Professional Active, busy & Travelers/
special s working workplace
teabags consumers
younger in age
who seek
convenience & in
their busy
lifestyles
Jasmine 22+ House wives Health conscious, Households/
green tea dieting females. Offices

Tezdum 25+ Farmers/Athl Vigorous/energeti Dhabbas/

etes c Households
Chenak 25+ Housewives/ Strong Households/
Dust Blue-collar Offices
workers
Ice tea 18-35 Students Outgoing, active Restaurants/cafes
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TAPAL’S UNDERSTANDING OF CONSUMER BEHAVIOUR

Since blending tea has been a passion at the core of sales activities for three
generations. Tapal family had its finger on the pulse of tea tasting buds of
consumer. Their likes and preferences……………..the most important
ingredient for not only understanding consumer need but making the brand
succeeds. For Tapal, Its DANEDAR & FAMILY MIXTURE Brands are foremost
examples. Back in 1947 Adam Ali Tapal successfully created a new taste
variant by blending dust and leaf tea which was then known as family
mixture.

Thirty years later in 1977 a formidable two-prone strategy to achieve

company goal: maintain and continuously improve blending quality and
vigorously pursue brand-building exercise. Besides its legacy of tea being a
habit and a light-hearted social need Tapal realize early that tea drinking is a
serious business at both individual and collective level.

While the competitors were producing blends based on Srilankans tea

imports, Tapal for the first time introduced tea from Kenya which was
stronger in taste and the satisfying blend was happily accepted by the
consumers.
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PRODUCT
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.

Product Features
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.

Product Style & Design

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
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nation. From this we can easily conclude how Danedar’s values, features,
design and style is compatible to its customers and their lifestyle.

Product Line:

Tapal has introduced new tea concepts and developed under its product
range, a wide range of tea blends catering specifically to the tastes of people
throughout Pakistan. Today Tapal has become the largest, 100% Pakistani
owned Tea Company in the country. The saga of Tapal tea started with its
formulation of a unique tea blend, which was later named Tapal family
mixture, that led to the brand name of Tapal tea becoming a hot favorite,
and eventually the largest selling tea brand in Pakistan. The current product
line of Tapal consists of the following brands: Following are the products of
Tapal:

Safari Kenya Leaf

Tezdum

Tapal Danedar:

As evident by its name 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,
grainy and fairly even. Danedar blend is an excellent combination of lively
taste and distinct flavor of world’s best high grown teas, which produces
satisfying cup of tea for the consumers who like aromatic/flavor tea. The
most important feature of this top quality Danedar brand is that the
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characteristics of a brewed cup remain intact even after a long time. Simply,
Danedar is a powerful brand and a great value product and there is no real
substitute of it.

Tapal Family Mixture:

Family mixture is a blend of high grown Kenyan primary leaf and dust
grades, which are carefully selected for their rich cooler, distinct flavor and a
light golden appearance. The leaf and dust grades enhance a faster mixture
guaranteeing the consumer a rich flavor cup within a quick brewing time.
Only tea leaves which are low in moisture content is selected for Family
mixture in order to guarantee a long shelf life and a longer liveliness period
of the brewed tea.

Chenak Dust:

Chenak dust is an economy tea embracing high grown flavored teas which
are proportionally blended with medium grown Kenyan golden leaves. This
gives an all round cup of tea at a reasonably lower price Chenak Dust infuses
quickly and gives a strong cup of tea within a very short time. This brand is
popular with actual tea lovers who love drinking tea several times a day
because of its low price.

Tapal Mezban:

Tapal Mezban Dust has an attractive neat, black and grainy appearance. It is
the finest quality dust blend which is carefully selected for its quick liquoring
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characteristics. Only high grown Kenyan teas are used for this blend due to
their high concentration of flavor and strength. Mezban Dust has a smooth,
thick and full cup with an irresistible aroma making it a perfect cup at any
time of the day. A small quantity of Mezban Dust makes several cups of tea,
which makes it both suitable for domestic use but even more for the hot tea
shop consumers who prefer a quick and strong cup of tea.

Tapal Special Tea Bags:

The unique flavor of high grown leaves especially selected from the finest
tea gardens in the world make Tapal Special Teabags a treat at any time.
The combination of an extra strong blend with the convenience of
environmental friendly metal-free tea bags has made Tapal Special an
instant hit with consumers.

Tapal Ice Tea:

The super market culture has changed consumer purchase habits and the
youth today has ample choices in front of them, even when compared to 5
years ago. Increasingly they are becoming a huge market on their own.
Tapal wants to increasingly cater to the youth market and has done so with
the launch of Tapal Ice Tea. With Tapal ice tea, Tapal has literally set a new
precedent in the market. Tapal Ice Tea is not a new product but it is a first of
its kind in Pakistan. Tapal ice tea is made for today's generation which loves
to enjoy their life at its fullest and chill out. Thirst-quenching and delicious,
Ice Tea is pure and satisfying. Made from real tea, it combines the goodness
of tea antioxidants with no preservatives, no artificial colors and only a small
percentage of sugar which is less than most regular soft drinks. Thus tapal
Ice tea is a refreshing addition to TAPAL’s popular product line of traditional
teas.
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Jasmine Green Tea:

Tapal Shades of Green is an aromatic combination of the finest carefully

selected tea leaves and the tantalizing freshness of natural Jasmine, Elaichi
and Lemon.

PRICING
Various factors need to be considered while pricing a product. The factors
considered by Tapal 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”
ssand rarely through lowering of prices) and company’s profits, not
necessarily in the same order

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 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 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.

Tapal does not implement location based pricing. Even though our contact
was adamant about his views that Tapal 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 has practiced
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various market penetration strategies and intensive distribution whilst

focusing on the attributes of its tea as well as packaging.

PRODUCT SIZE PRICE (IN RS)

DANEDAR 200 grams 60
FAMILY MIXTURE 200 grams 54
DANNEDAR TEA 100 grams 120
BAGS
TAPAL TAZEDUM 400 85

VALUE DELIVERY NETWORK

Tapal imports its raw materials like tea leaves from Kenya. These raw
materials reach the Karachi port from where they are taken to the factory.
They are also growing tea leaves locally. The raw materials are then used to
manufacture the actual product: Tapal Family Mixture, Tapal Danedar, Tapal
Tez Dum, Tapal Safari Chai, Mezban Premier Dust ,Chenak Dust and Tapal
Jasmine Green Tea, Tapal Safari Kenya leaf. Most of the raw materials are
imported, and of course the packaging for the product is done in Pakistan.

Raw materials

imported Kenya and

grown locally

Production of the tea

(Factory)

Wholesalers
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Retailers

Consumers

After the product is made, it is taken by the distributors who distribute the
final product all over Pakistan. The wholesalers take the products in large
bulks from the factory on a fixed profit margin and then sell it to other
channels like retailers of general store, super stores, beauty shops etc. who
then sell the product to final consumers.

These distributors are not permanent but when the product is about to enter
the market, they are informed about it and they themselves buy it in any
quantity they want (usually a fixed volume set by the company). As for the
retailers, it is also their wish in how much volume they would buy the
product because sometimes they already have large inventory and
sometimes they have small volume to serve consumer demands.

The profit margin between the retailers and distributors is decided amongst
themselves because usually retailers can sell the product upto 15-20% profit
margin, So some of the profit has to be shared with the distributors also.

SUGGESTED UPGRADE FOR THE VALUE DELIVERY

NETWORK

Tapal imports its raw materials from Kenya that could prove to be very risky
as in case of economic crisis or natural calamity. Such situations can cause
the orders for raw materials not to be completed on time, or may have
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Management

problems in completing the orders at all. Tapal should try to build such
relations that would assist in delivering the raw materials even if there is a
crisis in the supplier’s country (they must not back out in such times) or be
able to help when there is excess demand in the market and company’s
stock is low.

Tapal can also think of making its own raw materials in Pakistan the long
term it can help ponds reduce its costs, so on the same time reduce its price
which can bring it closer to the competitors and in the long-run they can
even export it to other countries which is going to be strategically very
crucial in future times.

Tapal, with its strategy of importing the raw materials has to bear the
shipping costs and the taxes. Though this plan, if implemented needs a lot of
investment but the returns would be high. Raw materials would be available
on short period notices, foreign exchange would be saved which is spent on
paying taxes, shipping costs and to importers. Basically, the company would
be able to look after the quality of raw materials and closely monitor its costs
because fluctuating exchange rates and inability to check on raw materials
sometimes creates problems.

Although Tapal is available in more places like in villages etc easily than
other brands but it should make its distribution stronger. It should hire its
own distributors and give them incentives by not allowing them to sell the
competitors tea products. Permanent distributors would always stay loyal
because presently Tapal and Lipton dominate the market but arrival of any
another good tea brand may compel distributors to buy more of that product
if they are given good incentives like greater profit margin.

Distributors chosen should also be such that run their channels on large and
wide scale; selling and making the product available even in remote areas.
Making the distributors part of the company is necessary and keeping
positive relations is essential part.

Therefore, any break in the value delivery chain would prove to be harmful
not only for company but for the consumers also. Consumers not getting the
product on time would compel them to ask for the competitor’s product and
the company would lose out its profits and customers. In between, other
channels would encounter the same problems. So these actions are
necessary in order to strengthen the value deliver chain network.
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Management

DISTRIBUTION STRATEGY
The distribution objective of Tapal is to maximize its market coverage. To
accomplish this Tapal has a wide distribution network of 410 distributors
across Pakistan. Tapal has a wider distribution coverage in the South where
as Unilever has better distribution in the North. Therefore, Tapal’s main
objective is to increase their sales in the North. It ensures that it places its
tea in the same outlets as its competitors in order to maximize availability.
The distribution coverage of Tapal is as follows:

1. Karachi 14%

2. Lahore 34%

3. Islamabad 18%

4. Sukkur 22%

5. Hyderabad 12%
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Management

Distributors:
Tapal deals only with distributors on contract basis with no other
intermediaries involved. They do not extend credits to their primary
customers and all their sales are mainly cash based.The contract comprises
of a specification of a complete volume of the market, Tapal’s share in the
market, the profit margin of the distributor, the sales that will be made by
the distributor, as well as the complete route plan of the distribution
network.

Tapal chooses their distributors after analyzing their complete financial

background and Public Relations. They provide the distributors with a
detailed description of the distribution network; all the costs and expenses
involved and when the distributor agrees the contract is signed. This contract
involves the condition that the distributor has to be brand loyal, pro-active
and cannot deal with other tea companies otherwise the contract will be
terminated. The contract includes a clause that describes its termination
process. Either of the two parties: Tapal and the distributor, can terminate
the contract on one month basis.
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Management

DISTRIBUTION STRUCTURE

Company

Distributor

Whole sellers Retailers

Universitie Restaurant
s s/ House
Offices
Institution holds
s

END USERS /APPLICATIONS OF

PRODUCTS

Interpretation:
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31
Management

• The manufacturers sell from their warehouses to their major distributors,

which sell directly to wholesalers, who either pass it on to the retailers
and then to the end user or to the end users directly.
• Distributors also sell directly to large retailers and then the product is
passed onto the consumers.
• This distribution trend of the industry is very similar to what Tapal follows.
Tapal also sells directly to OOH (Out of House), which comprise of
educational institutions, companies, travel & hot teashops.
Tapal’s outlet coverage (2005) was 75% and its market reach(2005)
was 30%.

Supply Chain

Vendor/Suppli Storag
Order Process Type/Market
er e

CUSTOMER
MANUFACTURIN
FORECAST WAREHOUSING DISTRIBUTION
G
/TRADE

Invent Scheduling/ti
Feedback
R/D industry ory ming

PROMOTIONAL STRATEGIES
Communication of the value created by the company is very important; this
stage in our view is the trickiest stage of the entire value creation process.
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Management

The entire effort of creating the value will go down the drain if the
communication is not done properly. There are cases when a company fails
to communicate the value to the selected target customers or even worse
when the target customers get the wrong message. There are many ways to
communicate the value created; Tapal has used the following tools and
techniques to communicate the value they have created for their target
customers.

Advertising
As far as Advertising is concerned, the company has shifted away from
television advertising to “MASS ADVERTISING”. The basic reason for the shift
is that the organization realizes that television advertising is not the same as
it used to be around 12-13 years ago. With a wide range of television
channels available it is very difficult to convince the viewer to not to change
his/her channel. But this does not means that they do not indulge in
television advertising at all. The new brand “Tapal Mezban Dust” is targeted
for the customers of interior Sindh. This brand extension needs both TV as
well as mass marketing as it is struggling with in the awareness stage. The
TV adds show the culture of Sindh and tries to correlate the sindhi heritage
of hospitality with the image of the brand. Ads are shown on KTN as it is
believed that sindhi viewers do not change the channel during commercial
breaks as it is the only sindhi channel.

Mass Advertising in the form of billboards are the most common form of
advertising. The expenditure ratio of mass adverting to television advertising
is 1.5 to 1. Big billboards with high color resolution for ‘Gulbahar’ (their new
green tea) are good at tempting the customer to try the crystal clear green
tea. The portrayal of men wearing formal suits and having tea at restaurants
has persuaded people of the corporate sector to try the slightly expensive
green tea. Advertising on the new Fm radio channels like City Radio or FM
107, FM 96 is also extensively done for the young urban crowd for family
mixture.
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Management

Public Relations
As far as publications such as catalogues and brochures are concerned the
company does not have any such publications. They have not yet focused on
the possibility of issuing any sort of publications for improving upon public
relations.
Personal Selling
The company has a B2B (business to business) approach as far as personal
selling is concerned. Sales rep visit hotels like Marriott and Sheraton to offer
bulk amounts at a discount rate. Through this process they are able to sell
more and this serves as an easy method for further communication of the
value which was promised primarily in ads and billboards. Face to face
communication of value is much more effective than advertising as
immediate feedback can be received which helps in ameliorating the
communication process.
Direct Marketing
Again no form of this communication is taking place at a formal level. The
company does not have a separate department. The only form of direct
marketing is done by the brand managers who readily receive any
complaints and comments about their brand through emails but do not
respond to those emails. They only look after certain complaints which have
been reported consistently.
Sales Promotion
Sales are promoted by encouraging the market segments through free
sampling. The target segments are given free samples of the tea brand
which is targeted for them. For instance in Lyari and Malir there are quite a
few colleges where people of lower middle class income segment come to
study. They like tea which is high in caffeine and strong in taste so that they
can nourish their minds. Free sampling of such a brand (Tez Dam) was
carried out for almost 2 weeks. After 2 weeks a lot of students bought the
product although the product was no more for free and had no market before
the free sampling was done.
Sales Force
Tapal at present has hard any notable sales force. When asked why? The
company manager responded that since Tapal makes tea. Tea is a
convenience product, such products are widely available, and customers
have frequent purchase with little shopping effort. Such products have little
customer involvement; hence a well equipped sales force is not essentially
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Management

required. According to the manager of Tapal, making sure that the product is
available all the time is more important.