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Tetley Winning The Battle.

Byline: Izzah Taimur Butt

In Sep'2012 Zuhair Muhammad, Managing Director, Tetley marketing was confronted with numerous challenges. After the initial launch of Tetley in Jan'2006, sales not only failed to pick up but the brand was showing clear signs of fatigue and failure. Weak and irrelevant advertising with multiple blends launch strategy at country wide level appeared to be a key failure in the market, where few brands dominated the market.

The challenge ahead was not only, to rebuild the brand image and quality perception but also to gain market share from the premium established Tea brands in Pakistan. Low sales had become a continuing problem; no amount of effort had been fruitful in attaining satisfactory tea sales in Pakistan. The company had to come up with a plan that would meet multiple goals. The company desperately needed to increase sales and enhance the brand image. Zuhair knew, time was running, the company needed a new marketing strategy.

Pakistan's Tea Industry

Pakistan's tea market was divided into 3 segments i.e. Premium which held 83% share followed by popular segment at 15% and the rest 2% was discount segment. In 2005 Per capita consumption was 0.95 kg per annum which one of the highest in the world. Tea market volume had dropped from 141,100 tons in 2009 to 139,750 tons in 2010 despite of population growth of 5%. Resulting a falling trend of volume every year since 2007( see Annexure A).The coming year 2011 was expected to end with positive results as tea had 99% HH(House Hold) penetration nationally.

Tea Market Segmentation1:

Pakistan tea market was divided into 3 segments .Premium which held 83% share followed by popular segment (see Annexure B). Per capita consumption was 0.95 kg per annum which was one of the highest in the world. Tea contributed the 38% of the beverages consumption (see Annexure C). Pakistan's 44% of tea consumption was unbranded which was mainly consumed in Hot Tea shops and Out of Home (OOH) channel. Whilst 56% was branded tea was consumed in

House Holds. There had been a serious change in habits of teas drinkers towards drop in average quantity. It was believed that this drop was mainly, due to awareness of other types of drinks. The new generation was adapting to modern drinks. Further aggressive marketing from beverages companies added to building the demand for cold drinks.

User ship2:

Nationally tea had 99% HH penetration. OOH consumption was on the rise which was mostly at Hot Tea Shops. The Trend of drinking green tea after meals was on the rise. Between 2009 and 2010, branded tea had grown in urban areas, whereas rural share remained stagnant. Loose tea users remained stagnant nationally.

Pakistani consumer's study revealed that Pakistani tea consumers were very particular and perceptive about tea quality. There was a high level of brand loyalty among them. Buying decision was made by house wives and purchase made by male members. Usage occasions 94% in Breakfast, 70% in evening, 29% after dinner and 22% before breakfast.

Tea was considered an integral part of life. Its physical effects were:-

* Revival and refreshment

* Removes Headache

* As a Habit

* Food Supplement

Its emotional effects were:-

* Feel relaxed

* Makes guest feel welcomed

* Makes one mentally alert

Tetley Launch

Tetley was launched in Pakistan in Jan 2006, with a range of black tea; blend specially appeal to the sophisticated palette of the Pakistani tea drinker. It was owned by a renowned business group; Lakson Group of Companies and managed by Zuhair Ali, Managing Director, who was also looking after Colgate/clover business.

Pakistani consumers were real tea connoisseurs with a preference for quality, strong, loose leaf teas. Tetley blend was made from of finest African tea imported from Kenya, Tanzania, Rwanda, Burundi and Ceylon. Tetley was introduced in four variants i.e. 'Tetley Patti', 'Tetley Dana', 'Tetley Mixture' and 'Tetley Gold tea bags'. This range was available in a mix of different pack sizes i.e. in cartons, sachets, pouches and tea bags.

Tetley The Product

Product: Tetley

Skus: Sachets, Hard packs, HTS (hot tea shop) pack and tea

Bags.

Variants:

Tetley Dana: Thick granular tea, mild in taste and moderate strong.

Good aroma. Upward leafs of tea plant.

Tetley Patti: Medium granular tea, Strong taste, Good aroma. Middle leafs of tea plants.

Tetley Mixture: Grind granular of tea, Strong taste, Medium aroma, middle and stern leafs of tea plans.

Tetley Gold Tea Bags: Refined Granular of tea, Strong taste, Good aroma, Mixture blends.

The launch was headed by the Executive Director, Mr. Nawaz Akbar, who had 20 years of experience within the Lakson Group. Initially he started his career as Asstant Brand Manager in Colgate Palmolive. There after he was promoted as Brand manager and later on moved to take responsibilities as Business Development Manager and General Manager Sales of Colgate andClover. Thereafter Mr. Nawaz Akbar was upgraded as an Executive Director of Clover Pakistan Limited. In addition to this he was also assigned the Tetley Business with no prior tea experience at all (see Annexure D).

Tetley was launched nationally, with the help of sister its concerns i.e. COLGATE PALMOLIVE and Clover Pakistan sales team. The company used the same channels of distribution it had employed in its sister concern namely distributor and retailer. The sister concern's sales team initially helped in the distribution of Tetley for six weeks however after that, they went back to attend their own responsibilities. Thus, Tetley's staff was left on their own to run the sales operations. Tetley sales force was newly appointed, had no prior tea selling experience. To add to this the distributor sales force who were the front line soldiers were hired on a very short notice. Hence they lacked essential trainings about product knowledge and market norms. Nawaz was of the opinion that Tetley would be a hot cake to sell, and consequently did not require trained sale men. Although, he was strongly advised by his peers to hire and train the sales force at least 3 months prior to launch.

Despite all of the suggestions Nawaz hired the salesmen a few days before the launch. Therefore, they were familiar with the journey cycle/routing and geographies of the markets at the time of the launch. Furthermore the briefing to the distributors by the company was inappropriate vis-a-vis infrastructure requirements i.e. Number of delivery vans, sales men, order bookers, stock suppliers and merchandisers. Thus, the launch plan was haphazard and not prepared and shared in advance.

On top of this Nawaz and his team were not at all equipped to fight the battle with the competitors. Unilever and Tapal the two major competitors were fully aware of Tetley's launch time. Hence they had pushed heavy stocks in the market with extremely lavish trade offers to the trade. By this act, competition was able to tie up the trade investment in their brands to block the launch of Tetley. Hence at the time of the launch competitors released heavy burst of advertisements, spending far exceeding their budgets.

Competition

Unilever

Nationally Unilever Pakistan was losing market share. Still the company had the highest national share with a tremendous rural contribution. Within Unilever brand rural share was 76% in 2010 but declined to 74% in 2011. Only Supreme seemed to be growing in rural areas. Remaining two major brands i.e. LYL[?] and Pearl Dust were declining both nationally and in rural areas (see Annexure E and FSS).Since the last 4 years Unilever had experienced volume decline. The company mainly expected success from it's the 3 brands, Yellow Label, Pearl Dust and Supreme. However, A- One was experiencing continuous decline. From 2007 onward Unilever's tea category had been left with 4 brands out of 14 in 2005(see Annexure G).

For the promotion of LYL different media were used in order to increase the effectiveness of the campaign. Budget was directly linked to the sales volume target. Television advertising took 55% of the marketing budget, following it was outdoor 15%, print media 10%, POS 5%, Radio 5%, DDS(Door to Door Sampling) and Sampling 5%. For the coming four years i.e. 2006 to 2010 the strategy was to promote the brand as an up-class brand for urban consumer. LBPL had laid the following objective for the next five years:-

* To attain clarity in quality

* Develop OOH consumption

Conversely, Supreme after takeover of Brooke Bond Supreme was positioned differently. Its aspiration was grown more to be a Pakistani Brand with its distinctive red packaging. It was a brand catering to masses' taste in Pakistan. It was promoted among middle and lower middle class segment especially in sub urban and rural markets. Pearl Dust was the promoted for the entire income group in Sind region. A1 / Kenya Mixture's marketing plan was to focus in Baluchistan which is a potential market for branded mixture and take share from Tapal Family Mixture nationally.

Tapal

Tapal was second biggest player in the market. Its market share had increased from 18%-20% in 2011.Main Gain was in Rural areas, whereas it had lost in urban areas. Tapal had worked on rural market in 2009 to gain 41% share from 39%(see Annexure E and F) .Past five years figure of Tapal Sales show that they have been gaining nationally and losing only in one brand i.e. Mezbaan Premium Dust, a dust blend focused on Sind Region only. Tapal continued to market its brands blend wise in every region. Particularly their focus was on Punjab where they expected to strengthen their Danedar brand.

Tapal was armed with voluminous budget of around 500 million for ATL and around 180 million for trade marketing, brand activation and rural vans operation. They had region wise bifurcation. Over all their yearly calculation of spend was per kg sale of tea. They planned to sell on negative margin for two years. This indicated an aggressive marketing strategy for newly launch Tetley.

Mushroom Brands

Mushroom brands had grown in urban and rural areas at a healthy pace. Loose and unbranded tea was stagnant nationally. Its share had dropped in the urban areas; however the effect was counter balanced by lead in rural areas in 2011 vs. 2010. In rural areas mushroom brands competed directly with Unilever brands that were growing continuously (see Annexure E and F).

Ultimately, tough competition and poor product definition resulted in poor repeat purchase. The tea variants lacked, packaging distinction from one and other. Thus, this created a lot of confusion among retailers and consumers. Due to this unclear distinction and illiterate population on both ends, the retailers were unable to comprehend as to what variant the consumer was demanding. Thus the consumer may have been a Tea Dana user, ending up purchasing and using a Tea Mixture/Leaf pack. Therefore ending up as a dissatisfied user and resulting in no repeat sales.

Right after the launch period, Executive Director, Mr. Nawaz encountered another serious problem. The distributor 's interest went down due to false commitment made by Tetley sales staff. The distributors incurred extra expenses during the launch. The sales staff had assured the distributors to share the expenses. However, after the unsuccessful launch the company refused to share the expense, as those were not approved by the company. Thus, unclear sale policies created a lot of confusion and misunderstandings resulting in severely demotivated distributors. Nawaz attributed low distributer morale problem to also low distributor margins. Tetley margin to the distributor was lower than what competition offered. The reason for this differential was tight company finances.

To achieve immediate volume growth and provide support to Tetley, Nawaz launch a campaign of two consumer promotions. However, the campaign failed to create the expected results. This further tied up the investments of the distributors in the trade in shape of market credit. The promotional support of Tetley was insufficient and the TV ad aired had no punch in persuading the consumers to purchase Tetley, as it was a poorly designed campaign. The claim made in the ad was far from reality. The ad message was not clear in communicating the brand TAG LINE being "Rangat, Lazzat, Zuban Pe Jannat" was a false claim.

Tetley continued to push stocks to distributor and the trade but consumption was extremely slow. Consumer trial did not result in repeat purchase and hence worrying situation for the company. Drastic remedial steps had to be taken before the situation became out of control. The entire company set up was reviewed, Zuhair Ali, the Managing Director was convinced that the service of an experienced tea marketing personnel was urgently needed.

The company finally bought in experience in mid-2007. Mr.Hamza Effendi, an IBA graduate, previously worked with Unilever Pakistan on their Tea Category, was hired as General Manger Marketing; having a distinction in taking major initiatives on Uniliver's biggest brand Brooke Bond Supreme. Mr. Hamza carried out a SWOT Analysis of Tetley launch and prepared a way forward marketing plan. Once he had firmed up his plan the sales team and the distributors meeting was conducted on a zone wise basis to regain the confidence of all. The purpose of the meeting was as follows:

* To share and discuss what the company had in mind for Tetley in Pakistan

* To understand Marketing / distribution issues regarding tea business.

* Finally to agree on a mutually way forward.

Hamza was fully aware that Tetley had failed to capture the market of Pakistan despite the massive effort of the management team .The failure of the launch had not only resulted in a drain of finances but also demotivated management team. An insignificant population of Pakistan was using Tetley, a brand which had a history of success worldwide. Hamza was deep thought trying figure out how to revive the brand as he convinced of its explosive potential.

After deep market analysis and feedback from all stake holders Hamza re- launched Tetley in 2008, with the new name "Tetley World" taking up with single blend strategy in Premium Leaf Category, abandoning previous three blends i.e. Dana, Patti and Mixture. He was well aware of competitions distribution coverage ( see Annexure H).He knew that Tetley was of no match to competition in terms of not only distribution but also finances. Thus, he aimed to focus the launch on top 100 Towns which confined to three mainstream Tetley tea zones i.e. Hyderabad, Sukkur and Multan. The first launch results, in these zones were comparatively better than rest of the zones. The bench mark was to target the single largest brand "Brook Bond Supreme".

"BBS" which was a leaf blend tea. The strategy focused more on specific markets rather than on national basis, as the company budgets were tight. Competition was aggressive and well prepared again. Five major consumer promotions were running simultaneously at the time of Tetley re-launch by competitors.

Mr. Hamza considered the three launch zones i.e. Sukkur, Multan and Hyderabad as the core operation area, as they were sustaining in encouraging volumes. He planned regular market tours in these zones; Spending more time with the sales team, distributors and their sales staff. He had realized that Tetley had an advantage of exclusive sales team in these zones in comparison to other zones. Dedicated working had other advantages as well, like immediate corrective actions/plans where and when needed. These zones had also developed exclusive rural van coverage plan for Tetley. This became Tetley's strength in reaching out those rural markets where competition was not directly covering. Tetley volumes were heavily depending on these Zones so the management diverted their all BTL activities i.e. were stall operation, wet tea sampling, empty pack redemption and lucky draws to these zones. Hence, Tetley's success was in rural and semi urban markets.

Mr. Hamza had the experience of managing nationally biggest tea brand "Brooke Bond Supreme" as a marketing manager. He had also ran the successful marketing campaign" Yehe to Hay Woapna Pan" . He didn't take any time for realignment of Tetley strategy. He also knew the brook Bond Supreme tea blend Quality, He sooner started marketing campaign against "BBS" exposing it as a Bhoosa Chai. Specifying, that Supreme tea sachets contained bushes not the original tea leaf. The aired campaign generated a good response, from the trade and consumers. The BTL activity for this campaign was supported through Demos. This had ignited a trust deficit for "BBS". Majority of the trade had also welcomed Tetley due to monopolistic approach of Unilever distributor. So game was on.

This move had gave huge growths in Sachets volumes, But the challenge was still on for the large size hard packs, Tea Bags and Economy pack. Most of all, the greatest challenge was to conquer the Metro Towns and rest of zones nationally. Very bravely, in mid-2009, Mr. Hamza launched a Tea bag campaign targeting the biggest Player of tea bags in Pakistan "Lipton". The TVC was stressing the 1000 perforations in Tetley tea bags which gave instant dilution of tea blend in hot water than Lipton. The Ad was widely focused, through print media covering all large magazines and newspapers. Sadly, though this campaign had not brought any notable results.

Hamza was not ready to give up. In late 2009; he once again started a campaign on Tetley hard packs specifying Legacy of "Tetley world" global success and popularity. The ad greatly stresses consumers' satisfaction of Australia, France, UK, Canada and USA. The ad was also supported by the empty wrapper redemption draw for consumers. Enticing chance of winning a return ticket of each country mentioned above. This promotion was unsuccessful in building Tetley hard pack awareness across metro Cities. In vain, the management made another attempt to support Tetley hard pack through a new campaign ad; specifying Tetley as a favorite tea of UK British guards who were most attentive and energetic.

However, these chains of campaigns were not bringing any incremental growths in business model. The company was about to lose the patience spending and after spending. The average volumes were intact. But those volumes were not enough to sustain the company's long term profitability and survival.

In 2010, Tea industry was struck by bad news, of riots in Kenya which was a biggest tea producing country. This had reduced the raw tea production/supply and had resulted the sudden price hike in the tea commodity. Tetley was not able to sustain the price war and inevitably raised the prices before the competition.

As competition had the advantage of huge stock pipe line, Tetley was exposed in the market with increased prices/ reduced gramage. "Tetley World" was the pioneer in bringing a Hard Pack in Rs.10/= price point in Pakistan. It was a success story in the tea market. The competition was selling the same Sku in poly bag. After torn of poly bag tea lose the efficacy and freshness. Poly bag was also considered one time usage. The hard pack had solved all solutions for consumers. It could be stored well and last more to bring economy for them. Sooner competition had followed Tetley in Rs.10/ hard pack. Since Tetley's Rs.10 had a good market acceptance and was the only source of in shelve pack display. Therefore, in the market sales force used this pack as a support to push other large sizes.

The sudden price increase had compelled company to reduce the gramage. Due to negative margins in the pack company was discouraged to continue this hard pack. Though, this decision was widely criticized by the company core sales team and distributors. Management was never ready to revisit its decision. This was a turning point of Tetley sales slide in this format. Now Tetley dependence increased on single format sachets. Which were normally bought by impulse and price based consumers.

The threat loudly surrounded company sales plans. Company dependency of volumes was on only single sachets. Since Competition was strong in large packs and they knew cleverly that the Tetley now had become more vulnerable that never before. They planned Extra tea in sachet formats to weaken the only source of volumes. Tetley had responded with the same scheme but the GTN(Gross to Net) was running out and hitting hard the company profits.

At the other hand Mr. Hamza and his team were also feeling the management expectation pressure. As still Tetley was not been able to gain market share outside their main stream zone and in hard pack formats. Merely 03 zones dependence was also not viable to move forward and get the mileage in Tetley volume pie. The time was running like ice melting.

Due to this mounting pressure in other zones unfortunately teams were built and rebuilt again. The sales model was changed to CTC (Colgate, Tetley, Clover) from exclusive in other zones. These repeated changes in challenging markets were proving hard nuts. Mr. Hamza was of the view that in History of tea industry all tea brands were initially established through exclusive sales force, Like Brook bond Supreme, Tapal, Lipton, Asfahani, Adam, Vital etc. He emphasized exclusive sales team model throughout nationally but decreasing profits had elude this plan as well.

Mr. Hamza had left the company for his personal future plans in start of 2011, and now the marketing was left without his experience. For some time the brand management had run the show but they have also left the company in 2011.

In Mid of 2011, Company hired a new Category manager with a fresh management trainees. Mr. Sakhi Taimur was assigned the challenging task of managing a struggling brand. He was brought under reporting of GM Marketing Colgate Mr. Faisal Qadri. They both have no prior experience of tea industry.

Mid 2011 Mr. Faisal and co. re-launched Tetley tea and brought generic changes in Tetley blend, packaging, graphics and the name. The new name was "Tetley Strong". The new launch was supported with 360 degree marketing plan; the launch meetings were held in all majors regions nationally. Unfortunately the launch was proved disastrous for the company. Tetley was dependent on Sachets volumes in low income and low awareness rural areas, where product identity, graphic design and blend were more meaning full. As a consequence the new packing and new name had brought confusion in the minds of the consumers. They refused to accept the packaging change as original Tetley. Consumers considered this as a counterfeit and perceived lower quality than the long associated "Tetley World".

Mr. Faisal took a hasty decision to re-launch Tetley. He was not only warned by his salesmen abut also criticized by the distributors for choosing the wrong season to launch. Ideally the tea launching period was pre-winter approaching. In Pakistan winter is considered the highest tea consumption period. Winter is ideal for launch to get extended trial period and favorable BTL climate.

The marketing was busy in spending more on trade and dumping volumes after launching. The product was stuck badly in the market due to poor off take. Soon Tetley touched lowest volumes in last 5 years. Mr. Faisal sheikh had missed the trick by changing the graphics and name. Tetley could not afford to reach the masses in rural via ATL and BTL to give proper awareness of the change. History showed that rural brands always brought minor changes in pack graphics. Changes are always supported with heavy ATL / BTL showing old and new brand packaging to avoid any confusions in the mind set of rural illiterate consumer base.

Now Tetley was in serious trouble and company volumes were dropping day by day. The sales team and distributor had asked for Tetley World old pack sachets to reassemble but management had declined to go back on producing old design justifying it as a global aligned launch. Meanwhile the situation was getting worst at trade, Distributors level.Trade was not willing to keep this brand

and even in main stream markets Tetley was losing consumers. At the other hand distributors had also lost the confidence in the brand. Faisal felt that the distributors were also getting tired of failures.

Soon after this failure launch the marketing team were not in position to continue and by accepting the responsibility the team had also resigned the services in 2012. Since then company had seen many lowest volumes months in 2012. But had never given the hope of coming back! But Noticeably the Managing Director is still confident and promising to not leave the battle ground as he had decades of experience of such challenging situations in Mega Colgate brands too. So the winning Battle is still continued......

Consequently Tetley was unsuccessful in capture any market share. The management had greatly exerted itself since the launch 2006 to unveil the causes of failure. The catastrophe was defined in terms of a trivial market share of Tetley, when the entire population of Pakistan was consistent tea drinkers. Though no conclusions were reached, no drastic steps were taken to resolve the problem. The managing director was nonetheless, convinced of the abundant potential of the Tetley.

###Annexure B

###Tea Market Segmentation

Premium###83%

Popular###15%

Discount###2%

Total###100%

###Annexure E

###Market Shares (%) 2011

###YEAR###NATIONAL###URBAN

Unilever###2011###28###29

###2011###27###29

TAPAL###2011###20###34

###2010###18###35

OTHER Branded###2011###6###8

###2010###4###5

LOOSE/UNBRANDED###2011###46###28

###2010###47###31

###Annexure F

###LBPL'S Rural Dominance

###Market Shares tv/f/i respective brand base (% in 2005

###YEAR###NATIONAL###uRBAN

Unilever###2011###100###26

###2010###100###24

TAPAL###2011###100###59

###2010###100###61

LOOSE/UNBRANDED###2011###100###23

###2010###100###26
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Publication:New Horizons
Geographic Code:9PAKI
Date:Dec 31, 2013
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