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In order to survive in a competitive business environment, companies must identify their strong areas and capitalize on them in a way that can give them leverage over their competitors. This is normally done through the form of marketing strategy that positions a company above the rest. It may involve not only offering better products and services but also rebranding its products and services to appeal to customers. A closer analysis of the market environment will also assist in identifying a particular niche on the market which could be leveraged and help the company to leap to the top. This paper presents an analysis of the marketing strategy by Dilmah Ceylon Tea, a tea marketing company that operates in Australia.
The Tea Marketing Environment of Australia in the Early 1980’s
The Australian tea market was largely dominated by two major companies: Unilever and AB Food and Beverage. The latter was a subsidiary of the Europe’s largest food marketing company, and the former was a household name in consumer products. This means that the competition for new entrants was characterized with a lot of risks. Yet, even with these two big players, their existed a niche on the market in the form of country-of-origin branded products. The changing lifestyle and demographic dimensions had also drastically affected the consumption of tea in Australia comparing to what it used to be in the 1960s and 1970s. This meant that less people were consuming tea even as consumer preferences fluctuated from one flavour to the other. Furthermore, the tea sector faced another competition, not from other competitors but products like coffee and carbonated beverages that were just hitting the market at the time. These products were popular with tea consumers because they provided variety and convenience. The coming of teabags, herbal tea products, and green tea heralded a new trend that could give tea consumers the convenience and health lifestyle that were sought after.
Factors that Prompted Sri-Lanka to Introduce a Sri-Lankan Owned Tea Brand to the Australian Market
The Australian market wanted a branded tea product that would be identified with the country of origin. The market was already full of tea products from the countries like India, Indonesia, Papua New Guinea and East Africa. The tea products from these countries were of high quality and with good pricing but failed to meet the needs of a country-branded product. The Sri Lankan government thus recognized the cost advantage that it would achieve given the low cost of production and packaging at the source, which also provided consumers with exactly what they needed on the market. The fact that Dilmah Ceylon Tea was just marketed as a product manufactured and packaged in Sri Lanka gave it an advantage over products from other countries.
Through Sri Lanka Tea Promotion Bureau and SriLanka Export Development Board, the Sri Lankan government also provided an opportunity for marketing and promotion of tea from Sri Lanka. It thus enabled the them to share profit margins through the distribution chains that limited the cost of marketing and promotion. Moreover, the fact that Australian government did not impose any import duties or taxes on the products that were coming from Sri Lanka also provided favourable circumstances for distributors from Sri Lanka to seize the opportunity to market the product from the country.
Experience has shown that customers are sensitive when it comes to the issue of product quality against the price. They have an intuitive capacity to attach the price to the quality and this is the reason why a variety of tea products is essential in meeting this kind of intuitiveness. However, the good news is that this sensitivity can also be applied to products whose pricing concurs with their quality. Therefore, Dilmah Ceylon Tea must arrange to ensure that the costs of marketing its supplies in Australia and other parts of the world are not passed down to the customer in the new stores. This may be achieved by locating suppliers in different parts of the country where demand matches the quality index of products in Australia. The company will focus on having supervisors in the suppliers’ manufacturing plants to oversee the quality and variety of tea products that are produced for its stores in Australia. In all its operation in the country, Dilmah Ceylon Tea will need to focus on providing high quality tea products at a reduced price, and this will be achieved by having limited number of suppliers to the new stores in the country, which will make negotiation of prices possible and easy.
Process Sri-Lanka Dilmah Ceylon Followed to Introduce its Tea to Australia
Dilmah Ceylon Tea was introduced on the Australian market by the government of Sri Lanka after identifying an attractive market opportunity in Australia. The first step the company took was to carry out an extensive research on the Australian tea market. The research revealed that the Australian market lacked tea products that were associated with the country of origin despite the demand for them. As such, Ceylon, the former name of Sri Lanka which many consumers in Australia identified the area with, was chosen as a brand name of the tea that was to be unveiled on the Australian market.
Its initial research also revealed that Sri Lanka had huge resources in terms of tea plantations and thus needed to match the market opportunity with these resources. Even though Sri Lankan tea was available on the Australian market, this was done in low quantity as consumers depended on the locally produced tea. In fact, these teas were imported to the market in bulk from different sources, blending and packaging done in the name of the local brands. Thus, introducing a product with a foreign name was definitely going to appeal to consumers. However, this was not the only reason why Ceylon tea was introduced in Australia; it was rather to meet the craving for a foreign branded tea product that was of high quality. Still, the amount of Ceylon tea that packers used in their blending was increasing, which meant that the particular tea from Sri Lanka was already popular with the consumers.
The company then came up with a new method of production; the cut, tear and curl were taking the Australian market by storm. At the same time, a traditional method of packaging by Sri Lankan producers was incorporated since it was expected to appeal to consumers. The research also revealed that the market was a bit crowded with major players like Unilever and AB Food and Beverage companies taking its big share. Ceylon then introduced teabags and the use of CTC in producing tea locally as a new strategy.
Moreover, Sri Lanka had a history of producing famous tea in the Australian market, and it was required simply to leverage on this popularity by producing a branded tea product that could be marketed as produced at the source. It was to have a strong influence on the perception of quality as well as the price of the product. And thus, the Dilmah Ceylon tea came in to offer cost-cutting due to its low cost of production and packaging at the source. The company also utilized strong distribution channel provided by Merill J Fernando which helped to introduce its tea into the Australian market.
The government also sponsored market research through focus groups, product sampling, and surveys that helped in evaluating the potential of the market to support a highly developed tea product. The business analysis also reinforced and substantiated the investment that the government put in researching, developing, and introducing the Dilmah Ceylon Tea to the Australian market. All these activities led to the development of the product and a communication strategy that included promotional activities, packaging, branding, and advertisements that heralded a brand that Australian consumers could easily identify with.
Dilmah Ceylon then focused on developing and introducing new products on the Australian market. Thus, it considered a number of factors such as focusing on quality and freshness of the product. It also differentiated its tea from other similar products on the market at the time. Pricing was also an entry factor as the market was full of cheap teas from other countries. Dilmah Ceylon Tea needed to appeal to the mainstream retail brands like Lipton and specialty tea importers such as Twinings in an effort to reflect the price offer of the new product. At the time, the Australian market was warmed up for teabags which had just come in. Therefore, Dilmah Ceylon tea was also introduced as such.
However, with a strong blueprint and objectives that resulted from the market research, Dilmah progressed into different variety and flavours to cater for different segments in the market. Thus, Dilmah Ceylon is served to different segments through products that range from gourmet black tea, original gardens teas, green tea, decaffeinated tea, real white tea, organic tea and real chai to a number of herbal infusion teas. Thus, Dilmah Ceylon tea embarked on a journey to change the image of Ceylon tea together with developing a form of confidence and trust from consumers on a concept that positions it as a high quality and marketable product in the tea market.
Consumer preferences, especially on products that are imported, are highly influenced by the country of origin of those products. For a long time, Ceylon tea was widely used in the blending of tea that was imported to Australia. This meant that Ceylon tea was originally famous among Australian consumers as packers had discovered the preference from customers. As such, when the time for introducing a branded tea product came, the name of the product was going to play an important role in the success of the product. By using the old name for Sri Lanka and also using the communication phrase ‘Pure Ceylon tea packed in Sri Lanka’, the developers of the Dilmah Ceylon tea were banking on the popularity of Sri Lankan tea in Australia to market their products.
In this regard, it was easier for consumers to sample out the Sri Lankan tea from several tea products from other countries. Although tea products from India, Papua New Guinea, Indonesia, and East Africa were marketed as affordable tea products in terms of price, the Dilmah Ceylon tea was marketed as originally from Sri Lanka with high quality and low cost. With time, and after the consumers became acquainted with the products, Dilmah is now marketed as a premium product targeting high-end consumers. The country of origin thus is the only factor that makes consumers to endear to Dilmah Ceylon tea even as price continues to increase. As such, the country of origin plays a crucial role in the success of Dilmah Ceylon tea as consumers have a perception that tea produced and packed in Sri Lanka is of high quality even if this may not necessarily be the case. This is what is referred to as positioning strategy that gives Dilmah Ceylon Tea an advantage over its competitors as consumers easily identify the product.
Future Strategies for Dilmah Ceylon
Dilmah Ceylon Tea has already positioned itself on the tea market as a reputable brand, and it currently operates in over 80 countries around the world. As the third largest marketer and seller of branded tea, Dilmah Ceylon Tea has concentrated so much in Australia for a good reason. This is because Australian consumers identify it with the various flavours that are marketed by the company. As it is the case with many consumer companies, the competition in this sector is heightened by the fact that barrier entries to the market are small; moreover, consumers have dynamic tastes for products depending on the manufacturing process and pricing. So far, Dilmah Ceylon Tea concentrates on the high-end consumers on the market. Thus, the company has branded its products expensively making them affordable only to wealthy people. The company has also well differentiated its products with various brands of tea such as gourmet black tea, original gardens teas, green tea, decaffeinated tea, real white tea, organic tea and real chai as well as herbal infusion products that can appeal to the consumers.
Communication also forms a greater part of the effective products marketing on the competitive market. As far as this is concerned, Dilmah Ceylon Tea is ahead of its competitors and has initiated strong communication strategies including branding of the products, distinctive packaging, strong advertisement events, and promotional activities that will give the company a head-start in meeting the needs of the customers. The company has also invested heavily in corporate social responsibility both in Australia and Sri Lanka with support services to communities that grow tea. The company works in collaboration with government agencies like the Sri Lanka Tea Promotion Bureau to develop new markets for tea that is imported from Sri Lanka.
The use of technology is also an important strategy in reaching out to consumers, and Dilmah Ceylon Tea has already excelled in this area. The company has an online portal where it sells its products to consumers through an online shop. The online shop provides customers with an opportunity to sample different types of teas that are available at the company including range, season, and format. This definitely is a strong marketing strategy because apart from allowing consumers to rate and review the products provided by the company, Dilmah Ceylon Tea also reaches out to buyers in different parts of the world. This ensures that its products have a wider reach to consumers.
Given the kind of strategies that the company has put in place, it is obvious that it needs to consider the segment of the market in Australia which is not served for a number of reasons, including the price of the products. Currently, almost all products are aimed at the high-end consumers on the market and this seems to neglect people who want to have tea at affordable prices. Therefore, the company needs to have a pricing strategy that gives everyone across the board an opportunity to sample the flavours it provides at an affordable price. As far as the promotion of its products is concerned, the company has effectively utilized its capacity to use different media including social media to reach out to the consumers.
Over the years, Dilmah Ceylon Tea has launched new products through research, and this has enabled it to remain on top of the competitors. The introduction of new items in terms of flavours, types, and range is a good positioning strategy in the marketing of consumable products. The company has thus continually introduced new brands in Australia, and consumers are given an opportunity to rate and comment on them. In the process, they have provided essential information on the trends in the market. The ability to integrate technology in the manufacture and selling of the products is an indication that Dilmah Ceylon Tea has the desire to remain the top manufacturer and marketer of high-end quality tea products. This is a good strategy because it will make consumers trust the company’s products thus reinforce the reputation that Dilmah Ceylon Tea has among the buyers as a number one producer of quality tea products.
Human resources and good facilities also play a crucial role in the customer’s satisfaction with the product that is being marketed. As a consumer product company, Dilmah Ceylon Tea needs to acquire highly trained professionals in the area of health, especially considering the issue of caffeine, so that it does not fall to victimization that tea has had. The general perception in the medical practice is that caffeine is not good for people’s health. With well trained highly professional staff, the company should be able to change this perception by investing in research and coming up with concrete findings that can support its business in the tea sector.
One major recommendation that Dilmah Ceylon Tea Company needs to consider in its strategy is the concept of differentiation and positioning of its products. With the increasing competition in the sector of health, Dilmah Ceylon Tea must begin thinking about the best way of packing and branding its services. This is the only way for it to stay attractive and be able to have its customers remaining loyal as it observes the new standards. Dilmah Ceylon Tea can achieve this by differentiating as well as positioning of its tea products. The company must be able to do this with the aim of increasing clients’ preferences as well as its own visibility. By differentiating its products, the company can gain a competitive advantage over its competitors. The strategy will particularly help the company to have unique brands incorporated into its package. This way, the customers will be able to choose its products over those of its competitors.
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Finally, Dilmah can use positioning strategy in the manipulation of its image as seen by the clients. It can achieve this through individual branding, where the company can position itself as a low-cost one. However, this will depend on the location of particular branches with the charges being equally different since the branches will be operating in areas where the targeted individuals differ in the income levels. Where the level of income of the targeted population is high, it will have to position itself as a high-cost one. It is this assurance that every individual, irrespective of their financial ability, can get something from the company that will see it positioning itself.
From the foregoing discussions, it is clear that Dilmah Ceylon Tea entered the Australian market at a time when consumer preferences and lifestyle were changing. New products like coffee and carbonated beverages were becoming popular in Australia. The market was dominated by two major players. Therefore, it was difficult to change the perception of customers. However, with a strong mission guided by research and development, a new product that was marketed through strong branding, marketing, and communication was able to get to the Australian market. The Dilmah Ceylon Tea thus serves different segments of the Australian consumer markets and uses different media and channels to reach out to them. The media include an online window where consumers can sample the varieties that are available under the brand name Ceylon. This gives Dilmah Ceylon Tea an advantage over its competitors. Besides positioning itself as the world number one choice, when it comes to premium tea, the company has also been differentiated through various brands. However, Dilmah Ceylon tea should consider segmenting its market so that it is not only a product for high-end consumers of tea in Australia. Instead, it will be able to reach the low-end consumers through the provision of high quality but affordable tea products.
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