Launch Of Green Tea In Uae Marketing Essayukessays.com /essays/marketing/launch-of-green-tea-in-uae-marketing-essay.php

A marketing plan provides a sound framework for developing the marketing strategy for a product. Ithas a list of action items like sales objective, budget requirement, resource requirement etc. It is a veryimportant part of the overall business plan. In the first submission, we had already talked at lengthabout the cultural and economic analysis of the market and features of the product. This submissionwill carry forward from where we left in the last assignment. We will take a closer look at the intricaciesof running a business like understanding the target market, designing a suitable promotion strategy,having an overview of distribution and production process etc.

The last part explained in detail the benefits of the green tea. It also explains how it protects the bodyagainst the most important carcinogens or tumors that can attack the body which is: indirect chemicalcarcinogens, physical carcinogens and direct chemical carcinogens.

We also analyze how to market the product and how will it work in the UAE. Such as: Culture analysisin the UAE, economic analysis in the UAE and competitive market analysis in the UAE.

Traditional approach to look at any product based marketing involves understanding of:

Financial data Factors like what will be the estimated product cost, distribution cost, expenses etc.

Product data It involves understanding of product pricing and other formalities like packaging etc.

Sales and distribution data It involves what should be the sale targets and associated costs andrevenues.

Advertising and sales promotion data which caters to promotion strategy for the product.

Thus preparing a good marketing plan can be a very complex process. But in a nutshell the aim of anymarketing plan is very simple, which is to understand the factors and situation which have an impact onsuccessful running of the business.

We have looked at the complete marketing plan from the perspective of our product-Green Tea hp. Thiswill be a new product in UAE market. As a result the challenge with this product is to start afresh withall marketing strategies. This project deals with various aspects of a marketing plan. To begin with itaddresses the marketing objectives.

Marketing objectives encompass setting realistic sales and profit expectations. This involves analysis ofthe total market for the product and the share for our product. Besides it also involves understandingthe target consumer.

Next section talks about marketing strategies. Marketing strategies outlines programs which will helpus reach the expected sales and profit targets outlined in marketing objectives. This involves howmuch and when to spend on advertising and other promotional activities.

Next we have discussed the implementation intricacies for our business. Tasks such as distributionfrom USA to UAE and price determination for the product are dealt with in this phase. These tasks areclosely related to the financial statements and budgets. For any new business, it is very critical that aclose check should be kept on the budget allocated and required. It is always good to have a plannedbudget before embarking on any new venture.

Last but not the least we have also looked at the resources required to sustainably run our newbusiness. Understanding the mode of generating financial resources, personnel resource and

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production capacity have been dealt in great detail.

Marketing Plan

Marketing Objectives

Target Markets

A target market is a specific group of people which a business thinks as their potential customers.They have similar characteristics like age, demographics, income etc. They also have similar buyingpatterns and can be classified as a separate category. The business tries to target this category whendeveloping marketing strategies for its products or services and all of its marketing messages andcampaigns are dedicated towards the target market.

To develop a powerful marketing plan, we should answer following questions regarding the targetmarket:

How well do we understand the needs of our target market?

Can we relate to what our target consumers need and what we have to offer?

Are there any ways by which we can offer highly customized products for different groups?

What product should be made generic and what should be offered to a broad set of consumers?

A well defined target market can build the success of any company. While making products available toa huge market looks attractive, we would like to target specific customers to make ourselves known inthe market. This is because green tea is new product in UAE and is not well known. In our previoussubmission, we had highlighted that we would specifically target the age group of 15-50.This wasbased on the consumption pattern of this group.

Demographics

As we know UAE has a large foreign expatriate population. The total population of the UAE isestimated at 2.3 million people. Only about 20 percent which represent 460,000 people of these areUAE locals. The rest are foreign workers. We would target all the people for our product.

The Age breakup of UAE is as follows

019 years: 27.4% (female 40,328,895, male 42,667,761 ;)

2064 years: 60.1% (female 90,813,578, male 89,881,041 ;)

65 years and over: 12.6% (female 21,991,195, male 15,858,477)

The above breakup highlights the huge proportion of working age group population in UAE.

Lifestyle

Lifestyle is one important key factor used in determining which segments are used to target customers.Some important information in this section is there which includes how the Emirates market lives, theirhobbies, their interests and their extracurricular activities. Emirates are living in extremely hot climateand they use tea as part of greeting to their guests most of the time.

Frequency

It's important to try and find out how frequently target segment will use the offered product or service.Specifically, businesses should always determine if they're looking for on time sale and be in premiumsegment or to target more customers more often through new and innovative marketing techniques.Emirates have decent per capita income and they usually prefer the large packs and try using newproducts that come in the market. One of the major factors which contributes to their type of behavior isthe diversity in their population. Exposure to various cultures makes them easily accept andexperiment new products more often.

Desires / Needs

Business should be surely discovering the general need of the country they are planning to enter withnew product. They should be aware of the basic desire and need of the emirates before launchingGreen Tea Hp here. Another point is that UAE development & taking care of health sector isparticipating in the general issue by health and is making awareness campaigns about the importanceof using the green tea and replaces the unhealthy food habits by using the healthy products. This willlead to decrease in the obesity and the diseases in the country. Therefore we can say that there isdesire and need of Emirates which is developing towards this product of Green Tea hp.

Expected Sales and Profit Expectation

Sales and Profit objectives define the projected amount of goods to be sold. Thus it is very important forthe success of any business that realistic objectives should be set. Once the sales objectives are set,everything else like marketing budget, channels to be used, number of sales personnel to hire etc. isbased on these objectives or expected sales figures.

For our product i.e. green tea we would look to cater to different tastes of the expatriate population.According to our research, we found that total UAE tea sales volumes showed a growth of 9% in 2009,or at 4,472 tons. (www.hktdc.com). Thus the change in tea sales from 2008 to 2009 is 369 tons. Thebelow table summarizes the sales figures for the next year.

Expected Sales Table

Growth in Sales in 2009

4472

Percentage Growth in 2009

9%

Sale in 2009

49,688

Sales in 2008

49688/1.09=45585

Change in Sale from 2008 to 2009

4103

Projected Sales in 2012(assuming same growth rate)

49688+(4103*3)=61997

This market is primarily controlled by Lipton (www.usa2uae.com, 2009). Most of the new players likeGreen Tea Hp would aim at getting a minor market share to begin with.

Based on the estimates from other new players like entering into this segment, like wagh bakri fromIndia, we would look to target at least 1 percent (www.usa2uae.com, 2009)

According to people in tea industry, UAE is looking for new and fresh taste in the tea segment. Alreadyavailable products do not cater to the expectations of the people. Since the migrant population comesfrom different backgrounds, they have different tastes. Thus our green tea with many flavors would beable to fulfill this need to some extent. Thus we can hope to hit at least 1 percent of the market share.

Thus 1 percent of projected sales in 2012 is 620 tons (approx). To calculate the profit margin we wouldtake industry standards for gross profit margin and cash profit margin. We would take conservativeestimates by assuming values lower a leading player in this industry. For our purpose we have takenTata Tea data (www.moneycontrol.com) and calculated accordingly for green tea.

Market Share

Average Price of tea in last year

Total revenue

620 Ton

3451.5 dollars/ton

620*3451.5=2139942 dollars

We have assumed the market price of tea at 3541.52 dollars per ton

Company

Gross Profit Margin

Cash Profit Margin

Profit Dollars

Tata Tea Beverage

10 Percent

9 Percent

NA

Green Tea Hp (UAE)

8.7 percent

8.7 percent

2139942*.087 = 186174

Promotion Mix

Advertising

Objective

Objective of advertisement will be to attract health conscious customers towards the green. Since thegreen tea belongs to premium segment therefore more stress will be given to attract urban areaconsumers who are willing to try something new.

Actually if we try to segment people of UAE, we can segregate people into two categories. One whoprefers to try new products available in the market and they are usually called experimenters. Othercategory try to retain their own family retained brand which will bar them from experimenting any newproduct. Our work, as a green tea promoter, should attract these early experimenters and make a markamong them. Because the late buyer or safe buyers usually change their buying decision only whenare too much exposed to any new product and when they really get to know that product is fine and canbe used and have superior benefit as compared to their already using product. Hence, we are going tokeep our target consumers to the premium family product thing. It will include kids, teenagers, fathersand Mothers. But the main target will be the teenagers who really care about their health.

Teenagers generally have the tendency to experiment with totally new product. They try to usewhatever there is in fashion. They want to be different from old generation and there they try every newthing which makes them different from their previous generation. That is why it is suggestible to makethem a target customer and make our ad strategy as per their symbol of change. Therefore to targetteenager and people in their twenties is be our prime strategy target.

We need to position our product as youth icon thing. We have to make its image to look as fashionableand belonging to premium class. To make this we will be using some Hollywood star as an endorserwhich is youth icon in the eyes of Emirates.

Media Mix

We are going to use the media mix in a way to reach every single people in Emirates in order to makethem of this new product in the market. Since ours is the first company launching this product in UAEtherefore it will be our tough task to educate and inform consumers about the health benefits anddifferentiation from the entire existing product available in the United Arab Emirate market. Thereforewe need to use following promotion media mix:

Advertisement in magazines, newspapers and television.

TV program.

Kiosks.

Billboards.

Banners.

The way we going to use this are to make this promotion in various phases. In first phase in whichproduct need to be made aware in the UAE market is to use the media which is most widely used inthe United Arab Emirates. Therefore we are going to take the initial advertisement through the use ofthe maximum reach basis. Since we all know that television is the best mode to reach to maximumpopulation in minimum time. This will accompanied with the

Message

Message which green tea should be cashing is to convey a royal brand Image and keep a youth iconassociated with product. Idea is to convey the health benefit and Premium product category amongyouth. Message should be something like conveying New and Young: Tried me!!.

Cost

Advertisement

Newspaper Advertisement

20000

TV Advertisement

30000

Kiosk Advertisement

10000

Magazine Advertisement

10000

Billboard

10000

Banners

10000

Promotions

10000

Advertising Expense

$ 100,000.00

Sales Promotion

Objective

Objective of sales promotion will be to attract more and more customer in very first year. This should bedone with the help of affordable small packaging of size as small as 100g. This should be the smallestpackage that should be available to the customer because smaller than this package will affect thebrand image which is the last thing company want to do.

Premiums

Gift with purchase is the very common promotion techniques used by marketers for promoting theproduct. It is used in a way to associate our product with something of real use to the segment we aretargeting. Since here we are targeting the youths therefore we can say that if we need to give somegoodies free with our green tea product we need to offer something which is of real use to theteenagers and adults. A small teddy bear or a fancy branded pen with the 1 kg pack will attractconsumer towards our product.

Coupon

Other way to attract the shopper towards our product is to let them buy the product with some freemovie coupon. This thing which is really famous among the teenagers is to offer them free movietickets on lucky draw to some consumer. Something like free movie coupons to every 5th shoppers cancreate a magic. This is cheap from the point of publicity and can work a lot in gaining momentum forthe product.

Cost

Cost allotted to all this promotional strategy will be very less compared to advertisement expense weare incurring on the product. The main reason for this is because our main aim is to achieve more ofawareness and less of selling. We want to do marketing rather than selling. We are going to producewhat is needed there not we will sell whatever we have produced. Total Cost allotted to promotion willbe $10000 annually.

Personal Selling

At this stage personal selling will be avoided by Green Tea HP. This is totally new product in the market.Surely personal will help in sale but we are avoiding this to check our brand image deterioration. Weare planning to use this in B2B strategies but not in the business to customers strategy.

Other Promotional Method

All promotional strategy which we are planning is already described in above. As of now Green Tea hpproduct will not be experimented with some strange promotional technique. It can work but we dontwant to take risk for this totally new product in United Arab Emirates market.

Distribution: From Origin to Destination

Port Selection

United States is bounded by sea on both sides. In the west, it has Pacific Ocean whereas on the eastside, it has Atlantic Ocean. UAE on the other hand lies northwest of the Arabian Sea.

Origin

Since the manufacturing of Green Tea happens in Utah, we are interested in looking for major trading

ports near Utah. Utah lies towards the western side of US. Thus two major ports nearby are

Port of San Francisco, California

It lies on the western edge of the San Francisco Bay with a total trade capacity of 2,654,714 short tons.This is a major port with high amount of export trade.

Port of Coos Bay .Oregon

It is located on the Pacific coast, with major cities nearby. E.g. It Washington to the north and Californiato the south. This port too has high trading volume and is a good option since it had many logisticsoperator in nearby states.

Destination

UAE has seaports throughout the region. The major ports are Port Jebel Ali, Port Khor Fakkan , PortRashid, Port Saeed ,Port Khalid and Port Zayed.

Packaging

Packaging is required to protect the products from damage during transit and also during storage.Packaging also plays a crucial role in information transmission and sales.

Marking and Labeling Regulations

On any package, many types of labels are used. These may include trademarks, product certificationsand food authority approvals etc. To make full use of packaging, we intend to publicize the healthbenefits of green tea through labeling. Approvals from health authorities and results of study on greentea can be highlighted through package.

Containerization

During shipping of containers, one needs to take care of identification and bar codes and RFIDnumbers for easy tracking and shipment of goods. Another important aspect to consider is thecontainer standards. There are many container system standards worldwide. It is essential that thesame standards are used by both the trading partners for easy identification of goods.

Costs

Packaging represents a significant portion of the total cost on a product. For example, in tea industry, itis estimated that the cost of packaging can be as high as 30% of the total cost. This is primarily due tospecial type of packaging required to keep the tea fresh and increase the shelf life.

Another cost consideration in packaging is that it is extremely expensive to create a new packagingdesign including graphics and structure. Thus the choice of packaging should be a very thought outprocess.

For our product, GreenTea HP, we would make investments in generating a stable packaging system.We would restrict our packaging costs to 10 percent over the long term.

This includes the countrys industrial, agricultural, and animal products. The competent ministries anddepartments approve the bill and issue a certificate of origin for all national products meant forexportation. A copy of these documents should be submitted upon processing an export application.

The customs authorities employ the temporary deposit system in order to simplify and facilitate theprocedures for the importers. A deposit is an amount of money that the customs collects pending

payment of the customs duties or presentation of the original documents.

Price Determination

Transportation Cost

Transportation Cost will be there but that will be borne by wholesaler only. The wholesaler needs tohave enough margins as commission in order to bear this cost and still not make any losses. After thewholesaler the further transportation cost will borne by retailer. Because of all this, both the retailer andthe wholesaler are getting hefty commission.

Handling Expenses

Handling Expenses will be borne by company itself as most of these handling charges are there asfreight cost are from factory to onboard travelling.

Custom Duties

Custom duty is paid by company only as it is importing the raw tea leafs from elsewhere. The amountof custom duty generally depends upon the amount of import that is done. Company is paying $50000as custom fees for the product for very first year on annual basis.

Whole and Retail Mark Up and Discounts

Final Price

Product Cost

$ 2,020,000.00

Selling price (Profit Margin 8.7%)

$ 2,195,740.00

Selling Quantity we are targeting (Ton)

620

Company Price

Selling price per ton

$ 3,541.52

Selling price per Kg

$ 3.54

Selling price per 250g Pack

$ 0.89

Selling Price per 100g pack

$ 0.035

Wholesale Price (@13% WS Commission)

Selling price per Kg

$ 4.00

Selling price per 250g Pack

$ 1.00

Selling Price per 100g pack

$ 0.04

Retail Price (@12.5% Retail Commission)

Selling price per Kg

$ 4.50

Selling price per 250g Pack

$ 1.13

Selling Price per 100g pack

$ 0.05

Pro-formal financial Statement and Budget

Marketing Budget

Advertisement/Promotion Expense

Advertisement

Newspaper Advertisement

20000

TV Advertisement

30000

Kiosk Advertisement

10000

Magazine Advertisement

10000

Billboard

10000

Banners

10000

Promotion

10000

Advertising Expense

$ 100,000.00

Distribution Expense

Distribution Cost

Store Payroll

20000

Store Management

10000

Rent

10000

Utilities

10000

Depreciation

10000

Repair

20000

Maintenance

13000

Total Distribution Expense

93,000.00

Product Cost

Processing Raw Green tea cost

Raw product (1000 ton)

1,000,000.00

Processing Variable Cost

230,000.00

Processing Fixed Cost

270,000.00

Final Green Tea product (620 ton)

$ 1,500,000.00

Product Cost

Percentage of Selling Cost

Green Tea Product Cost(620 ton)

$ 1,500,000.00

74.3%

Custom expense

$ 50,000.00

2.5%

Packaging Cost

$ 200,000.00

9.9%

Selling Expense

$ 73,000.00

3.6%

Advertising Expense

$ 100,000.00

5.0%

Distribution Expense

$ 93,000.00

4.6%

Misc Expense

$ 4,000.00

0.2%

$ 2,020,000.00

Selling price (Profit Margin 8.7%)

$ 2,195,740.00

Final Price

Product Cost

$ 2,020,000.00

Selling price(Profit Margin 8.7%)

$ 2,195,740.00

Selling Quantity we are targeting (Ton)

620

Selling price per ton

$ 3,541.52

Selling price per Kg

$ 3.54

Selling price per 250g Pack

$ 0.89

Selling Price per 100g pack

$ 0.04

Other Cost

Misc Expense

$ 4,000.00

Pro forma annual profit and loss statement (Profit year)

Profit And Loss Statement

Income

Revenue

$ 2,195,740.00

Expense

Cost of Goods Sold

1,000,000.00

Processing Variable Expense

230,000.00

Processing Fixed expense

270,000.00

Custom expense

$ 50,000.00

Packaging Cost

$ 200,000.00

Selling Expense

$ 73,000.00

Advertising Expense

$ 100,000.00

Distribution Expense

$ 93,000.00

Misc Expense

$ 4,000.00

Total Expense

2,020,000.00

EBIT

$ 175,740.00

Interest

$ 25,000.00

EBT

$ 150,740.00

Tax @ 20%

$ 30,148.00

Net Income

$ 120,592.00

Resource Requirements

Finances

In a product life cycle, different financial needs arise at different points in time .The funding stages of abusiness are as follows:

Seed capital It is the amount you need initially to set up and plan your business activities.

Start-up capital It is the amount of money required to maintain operational activities like buying rawmaterial, processing etc in the first year. It is also called working capital

Mezzanine (expansion) capital It is required to expand the current facilities. e.g. to upscale theproduction to full installed capacity or to buy a new larger business.

For our product, Green Tea, finances will be required to start business operations, logistics anddistribution, to pay for customs, for setting up packaging facilities and so on. We need a sum of around500,000 dollars as calculated in above sections, of which 230,000 is variable cost and 270,000 arefixed cost.

Capital funding can be of two types Debt Capital and Equity Capital. Debt capital means taking a loanwhich can be paid back over a period of time. This gives an easy way to maintain control over thecompany as well as get funds. The most common type of debt funding for a new business like ours issecured loans.

To start any business, the first and foremost option that comes to mind is to avail business loans. Abusiness can also avail secured loans from banks by keeping some property as collateral with thebank. Amount of secured business loans depends on value of the security kept with the lender.Generally a secured loan can fetch an amount of 50,000 to 100,000 dollars. It can be paid back in aperiod of 5-30 years depending on the terms and conditions.

Equity capital is another way of funding in which people or firms become a part of the company. In thisway they earn a portion of your profits in ways of dividends or can make huge money when thecompany goes public.

Thus to determine the type of funding, we need to ask, that whether we are comfortable payingmonthly installments or we would like to give up ownership rights in our company. Along with this, weneed to ask following questions:

Does my business qualify for debt financing?

Am I willing to lose the secured collateral if the business fails?

Am I willing to share the confidential financial information of my company?

Some of other choices for funding a business include:

Personal savings.

Borrowing from family and friends.

Making a partner and using his personal funds.

Approaching a commercial finance company.

Getting venture-capital fund.

Thus to raise the funds of 1500,000 dollars, we can make following arrangements.

Funds Breakup

Seed Capital

500,000 Dollars

Secured Loans at 5 Percent

500,000 Dollars

Equity Capital for 10% stake in Company

500,000 Dollars

Personnel

Every organization should be clear about its human resource needs. Thus planning can help in gettingthe right number of people at the right place. This kind of planning is largely dependent on theorganizations overall goals.

Forecasting of personnel depends on the following factors:

Mission of the organization.

Projected Turnover.

Quality of employee skills.

Technological advances in production and packaging.

Personnel can be acquired from any of the following two sources

Internal

External

Internal recruitment refers to promotion of employees from within the organization to fill the gaps. Thisinvolves listing of an employees education and skill set and based on that making recommendation forpromotion. A company also considers performance levels of employees over past years.

External Supply of qualified candidates refers to getting the required personnel from outside theorganization. This involves having a good knowledge about the supply conditions in differentoccupations and awareness about the general business environment. The information about suchconditions and availability of personnel can be found in:

Monthly updates of national bank.

Publications of various associations.

Publications of various employment agencies.

Since ours is a new product, we would primarily be focusing on external sources to fill our personnelneeds. Also we would like to estimate the number of personnel required on the basis of ratio analysis. Itinvolves forecasting the employee numbers based on the ratio of some factor like sales volume to thenumber of people required per unit of sales. Our product has sales of 620 ton.

Production Capacity

It refers to the volume of products which can be manufactured in a plant or factory with a given amountof resources. Production capacity depends on the efficiency of machines and workforce. It is essentialthat highly efficient processes should be put in place for the same.

Another important concept to consider while deciding on the production capacity is capacity utilization.It gives a relationship between the actual production that happens in a plant with the total installedcapacity and potential production. For Green Tea HP, we would be targeting an actual productioncapacity of around 650 ton in the first year. But we plan to have installed capacity around 1500 ton. Wewould scale up the production in a phased manner.

Good production planning will help make better decisions in terms of sales, profit, expenses etc. Tocalculate production capacity, we should consider various factors like number of facilities, number ofemployees and equipment etc. Also number of employee required (discussed in previous section onpersonnel planning) plays a crucial part in the same.

We need to determine the number of hours per week for employees. For our product, we assume anindustry standard of 40 hours per week. The time spent in breaks, lunch time etc would be deductedfrom this time to calculate actual time spent on the production.

Once we have actual time spent on production and the number of employees employed, we cancalculate the actual production.

Actual Production = Actual hours spent in production * Number of Employees

Sources

Tea Processing Article Retrieved May 15, 2011, from Tea Manufacturing firm inputs

Website: http://www.enjoyingtea.com/teaprocessing1.html

Technology Trends in Tea Manufacturing Article Retrieved May 15, 2011, from Tea Manufacturing firminputs

Website: http://www.teauction.com/home/techtrend.asp

Frequently Asked Questions Retrieved May 15, 2011 from Green tea Hp

Website: www.greenteahp.tv

Green Tea. (n.d). Retrieved May 15, 2011, from www.centerimt.com

Website: http://www.centerimt.com/News/GreenTeaAssay_Detail.asp

UAE port Information Retrieved May 03,2011, Website: http://www.uae-shipping.net/forums/

Launch Of Green Tea In Uae Marketing EssayMarketing PlanMarketing ObjectivesTarget MarketsDemographicsLifestyleFrequencyDesires / NeedsExpected Sales and Profit ExpectationExpected Sales TablePromotion MixAdvertisingObjectiveMedia MixMessageCostSales PromotionObjectivePremiumsCouponCostPersonal SellingOther Promotional MethodDistribution: From Origin to DestinationPort SelectionOriginDestinationPackagingMarking and Labeling RegulationsContainerizationCostsPrice DeterminationTransportation CostHandling ExpensesCustom DutiesWhole and Retail Mark Up and DiscountsFinal PriceCompany PriceWholesale Price (@13% WS Commission)Retail Price (@12.5% Retail Commission)Pro-formal financial Statement and BudgetMarketing BudgetAdvertisement/Promotion ExpenseDistribution ExpenseDistribution CostTotal Distribution Expense93,000.00Product CostFinal Green Tea product (620 ton)Final PriceOther CostPro forma annual profit and loss statement (Profit year)Profit And Loss StatementIncomeExpenseEBITInterestEBTTax @ 20%Net IncomeResource RequirementsFinancesFunds BreakupPersonnelProduction CapacitySources