Executive Summary
China is recognized as the fastest growing countries in trade. There are various products that are sold in China and the market has been declared favorable to many due to its high demand brought about by the high population. Lipton tea is a product of Unilever Company which was recently launched in China and its market has been tremendously increasing for the past few years. Unilever caters in three types which include personal care, food brands and home care brands. Personal care brands include Lotions, creams and soaps, Food Brands include Lipton and Blue band while home care brands include the detergents.
Lipton is a product of Unilever in various parts of the world which is among the leading Consumer goods Company in the world. This brand was developed by Sir. Thomas Lipton a born innovator and entrepreneur who decided to make tea available to all at affordable prices and high quality. Before Lipton, tea was very expensive and was only available for the rich and variable in taste because of improper packaging and transportation. However, Thomas Lipton acquired tea estates and arranged for cheaper packaging and transportation methods direct from the tea gardens to the tea pots.
Vision and Mission Statement
The introduction of Lipton tea in China by the Unilever Company had great advantage towards them. The major mission for Lipton was for Unilever to become the leading consumer products Company in the country not forgetting its success in other areas such as Australia. Secondly, Introduction of Lipton was also to ensure that the company meets the needs and wants of consumers in the country not forgetting acquiring wider market coverage for the company thus more customers. Through this the Company could predict the needs of customers thus responding with competitive and creative branded services and products that also help to raise the standards of life.
The third mission for introduction of this product in China market was for the Unilever Company in China to attract and develop highly talented people who would enhance and empower growth in the business and marketing world. Last but not least, introduction of Lipton was a way of showing the customers how committed the Unilever Company is in continuous improvements in managing changes in our environment and longer terms of sustaining healthy business globally.
Industry Analysis
China is recognized as one of the major favoring markets in the world. The country is the world’s most densely populated according to research and contains about 1/5 of the population globally. Currently, Lipton brand has emerged the leading tea brand worldwide and is available in more than eighty countries globally. Since its introduction in China, iced tea, green teas and yellow label have emerged as a common trend in the country despite some claim that the product had defects which was later declared false. Though there was a problem for the customers adapting to the product, Unilever Company came up with a better means of advertisement which saw the purchase of Lipton rise tremendously in different regions within China. This helped increase the sales of the company thus creating a good company image among consumers in China though the name was later tarnished by the rumors by Greenpeace stating that Lipton tea failed to reach the safety standards. However, due to proper and effective means of advertising the business industry flourished due to this product since many were attracted to try especially when they realized that Lipton meant brightness, Vitality and fun.
Situation Analysis (Micro-Environment Factors)
Company
Unilever is one of the largest companies in the world with head offices in most of the countries in the world. People working in this company are all influenced by one objective which is customer need satisfaction and for them to achieve this goal they have set objectives and targets at work. Marketing managers set strategies of achieving the missions and decisions which are made by the top management whereas the work of other employees is working together to achieve them. Unilever’s effort go far than just providing the products but more importantly they provide health and nutrition tips and advice for the customers in order to give them a healthier lifestyle.
Marketing Intermediaries
Unilever intermediaries play an important role in distributing the Company’s products. The physical distribution of products is quite balanced since the Company’s products are available in almost all the retail stores worldwide meaning they cover a wide area. The Company has always maintained proper relations with the financial intermediaries of the firm and this has strongly helped the company in promoting its products.
Customers
Customers have always been contented by the Unilever Company’s products since the company has a variety of products that they use on regular basis. The fact that the company has always kept its standards in regards to the products and services has enhanced the relationship between Unilever and the customers. This has created royalty among the customers since it is hard for them to switch to other brands.
Macro-Environment Factors
PESTEL analysis helps the managers in determining factors that helps them in decision making. These include all the societal factors which affect the company including natural, demographic, political, economical and cultural forces
Technological Factors
Lipton tea was as a result of new technological processes of research and production. Unilever Company in China has always adapted the use of new technological methods in its research and development, marketing, advertising and product development thus the numerous successes with the consideration that China is among the leading companies in technology.
Demographics
Tea intake in China is high and therefore this is important to the company since they produce more products thus helping the company to grow. Demographics include gender, location, age and occupation. Lipton tea is designed for upper middle class, upper lower and upper middle class. The target market for Lipton in China is between the age of ten years to sixty years and the product does not target children at all.
Economic Forces
In 2007 China’s GDP improved with a growth rate of 11.9%. This kind of growth showed China’s potential in the Chinese market and also helped improve the people’s living standards. Service sectors and technology was upgraded in consumer spending. China is said to be economically developed by three cities which include Beijing, Shanghai and Guangzhou. They have helped attract foreign investors and international trade and currently the growth has even increased. Economic factors such as decline in production, inflation rate and low income have influenced the buying pattern of the people in China especially for Lipton tea which belongs to a scrupulous market and niche market.
Product Positioning
Positioning is the way the product is viewed by consumers on important attributes. Lipton is known and classified as a high class product which is linked with the middle class in China. The product displays itself as an elegant, cosmopolitan, sophisticated and high class tea. Through its catchphrase it describes and displays itself as “is a sign of good taste” .In the mind of consumers, Lipton was positioned as a product of high quality, high price, great Aroma, New taste and a refreshing beverage.
Product Life Cycle
At each stage of the life cycle in various markets Lipton tea promotes its product. This includes in development, introduction, growth and maturity stages. Research and design is done during the stage of development whereby people are given freely to try. Sales tend to be slow since the product is new in the market. Since 1880 until now Lipton used low prices to set up growth in all the markets globally. The Company is at maturity stage and has all along been successful and has brought into market famous brands like Lipton tea which is also at maturity stage in China.
Market Segmentation
Market segmentation refers to a group of people who have the same interests, preferences and needs. Market segmentation allows the company to match its marketing mix more closely with the customers who have the same needs and demands. Customers can be served and ranked in terms of psychographics, demographics, behavioral and geographic basis. Tea consumption is our national routine, dependence and part of our evolutionary traditions; it is no more a style in China. Tea intake has become such a practice in China that such slogans for tea takers are in the sky
Target Market
Lipton tea has been using niche marketing strategy. The product chose niche marketing in China due to the fact that it goes for a larger share of one or few segments. Everyone is not interested with the taste and aroma, but only a few classy individuals who are seeking a great and unique lifestyle who will go for Lipton tea. Lipton in China has targeted the urban areas and mostly concentrates on the middle and upper classes. The rate of Lipton intake between the male and females has raised currently, therefore, the age group segment is in between fifteen and sixty since the company targets people who are young trendy and cosmopolitan.
Lipton tea is a Unilever product which is a quality and expensive product. Lipton group in China understood the need of the niche market and the fact that it is inventive and need changes. In China the new tasty tea is advertised by the company since the people like it and thus they notice the lifestyle of Chinese people. However, Lipton focuses more on commercialization of the product rather than the households. The product is available in shopping malls, universities and offices and this shows that the product targets those individuals who are seeking comfort, pleasure and convenience.
International Market
China has had effective and successful international trade with various countries in different continents especially America, Australia and Africa. The trade has played a very important role in the world economy most especially the world economic development. In terms of Gross domestic Product China is termed as the fourth largest globally since it has contributed up to five point two percent of the economic growth of the world. This rationale also helped Unilever Company which is recognized as an international company in launching its Lipton product in China and receive successful market.
Market Culture
Different countries have different cultural ways of carrying out their activities in areas of governence , business and others. When it comes to Chinese market the negotiation style becomes very sophisticated and time intensive. This therefore calls for patience especially for those international companies who want to enter the Chinese market if they have to succeed in their business deals. Cultural factors always have a huge influence in the Chinese market and it is therefore advisable to carry out an efficient market research before entering the market.
Competitive Strategies
Based on general patterns of rationale, practice and routine in diverse businesses, researchers have recognized common categories of business height competitive strategies. Michael Porter differentiates three competitive positions that Unilever China practices in order to acquire and maintain competitive advantages in various products markets. These strategies include differentiation, focus and overall cost leadership. Porter’s forces have helped the Unilever China to avoid direct contact with its competitors by concentrating on distinct market Niches. For entering China Lipton Company used low prices which helped them successfully enter the market and develop. The company has also adapted a strategy of using different ways of promoting the product in various segments.
Sale and success of Lipton’s tea was also as a result of porter’s five forces analyses. Unilever Company has always applied the forces in the sale of its products. When it comes to rivalry, competing with competitors for the Lipton tea was not so hectic in China their main objective was to change the prices every now and then. Lowering and increasing prices of the product was what Lipton tea did most so as to acquire more sales for the product and also for the company. Also, to prevent severe rivalry product differentiation and creative of efficient distribution channels helped the Lipton product to gain a competitive advantage towards the rivals.
The other porter’s force included threat of substitute products. Availability of other hot beverages in China proved to be a threat to the Lipton tea product. In order for Lipton tea to cope with this kind of competition, it introduced new product line and product flavors. Introduction of Lipton Green tea in China was one of the way in which the Unilever Company tried to deal with threats of substitute products in the country. Substitute products like coffee and other beverages can pause a huge threat to the organizations sale and marketing of product, therefore, an organization should be very careful and always be aware of its external environment.
Buyer power is another one of porter’s forces that is highly recognized in the sale of products especially when introducing new products in the market. Lipton tea received resistance in China due to the flavor that was not preferred by everyone. After the Unilever Company carried out a unique advertisement on the Lipton tea, people developed a very positive attitude towards the product since Unilever Company is known for its good name and reputation globally. The company has always created a good relationship between the internal and external environment and this has helped raise the company’s sales.
Power of Supplier: Powerful suppliers can always influence the sale in the company by providing raw materials at a very high price in order to have a share of the Company’s profits. In order to produce finished goods, an organization requires the help of suppliers in order to acquire raw materials. Unilever Company in China has always had good relations with its suppliers, and this helped create a good and ready market for the Lipton tea since the Company’s products are regarded as superior and of high quality.
The last force among porter’s forces is the threat of new entrants. Unilever Company has had to enter different countries globally and launch Lipton tea to suitable customers. In order to prevent the threat of new entrants in China they used low pricing on the product same as they use in most markets such as Australia. Promotion and advertising at different segments has also been used as a strategy to prevent new markets especially international.
Competitor Analysis - SWOT Analysis
Below is a table showing the strengths, weaknesses, opportunities and threats that Unilever China had over its competitors when they introduced Lipton into the market.
-Market opportunity for Lipton green tea in some rural areas in China.
-Less usage of tea as a beverage in China
-Increase in population growth
-Demand for more flavors which led to introduction of Lipton Green tea
Strengths
-Brand is turning out as a way of traditional habits
-Improved research and development
-Quicker expansion in other areas of the country
-An advantage due to creation of health awareness among consumers
-Emergence of pesticide claims in the China market regarding Lipton tea which reduced the sales of the product
Threats
-Political hindrances on exports
-Increased and high competition in rural and urban areas
-Increase of tea prices in international market
Strengths
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Strengths
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Strengths
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Though Lipton tea faced a scandal that claimed the product harmful, it was later declared a false alarm that was meant to tarnish the name of the company. Currently it is clear that the product has increased its sales in the market and all what is recommended is for Unilever China to maintain a profile of low prices on the product in order to acquire a larger market share. The company has an opportunity of winning the market if they sell Lipton tea at high prices since more and more people will choose the tea. The company can therefore increase the profits due to price competition. The company should also consider quality in order to maintain the people’s loyalty towards the brand in China. The Company has also an opportunity to create more flavors to satisfy customer’s different demands.
Strengths
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Dealfish.co.ke. History of Lipton Tea. n.d 2008. 18 July 2012
Jones, Charles W. L. Hill: Gareth R. "Strategic Management Theory: An Integrated Approach." Jones, Charles W. L. Hill: Gareth R. Strategic Management Theory: An Integrated Approach. South Western: Cengage Publishers, 2010. 60.
Unilever China. Lipton. n.d 2012. 18 July 2012
University Essays. An evaluation of the effectiveness. n.d 2012. 17 July 2012
