Case Study: Iced Tea market…



1.  EXECUTIVE SUMMARY

This report was undertaken to identify different marketing strategies that could be used by firms within the Iced Tea market. The report is based on information given in Chapter 3 of the Principles of Marketing textbook. It examines how consumers within a market can be split into more similar or homogeneous groups. The report also deals with how demand from these segments can be forecast, in order to help firms make decisions about the market.

The results of the analysis were as follows

  • Companies choose to segment the consumer market in order to meet consumer needs better.  The market could be segmented behaviourally according to people’s propensity to drink tea, demographically as the companies prefer to target young people, or even geographically.
  • Companies within the Iced Tea market should first determine overall size of the target market, and then decide the proportion that the company might want to cover.  They can then run market research including Test Marketing to determine the likelihood of sales.
  • Firms can also use past sales figures and consumers indicated intentions for the future to forecast demand.

As a consequence of this recommendations have been made for the marketing strategies of both companies dealt with in the case study: Pepsi/Lipton and Shin Shii.


Recommendations: After considering various alternatives for segmentation and market coverage (differentiated, undifferentiated and focused) the following recommendations are suggested

  • To target young people, heavy soft-drink consumers, from tea-drinking countries who like to be seen as innovators.
  • Shin Shii should use an undifferentiated market coverage strategy to market Kai Shii.
  • Shin Shii should position Kai Shii as a `new age' beverage.
  • Pepsi/Lipton should use a differentiated market coverage strategy, in order to use their association with brand name `Pepsi' to its full advantage.

CONTENTS PAGE

CONTENTS        PAGE NUMBERS

  1. Executive Summary                        2
  2. Introduction                        5
  3. Analysis                        8
  4. Conclusion                        12
  5. Alternative Strategies and Recommendations         13

Appendices                        17

References                                                        18


2.  INTRODUCTION

The following report deals with the iced tea market.  Although iced tea is not new, it is a small market which has started to grow in the 1990’s following the health concerns of customers regarding soft drinks and coffee. Consumers are young and also looking for new flavours and lighter drinks.  The traditional tea sector had been declining in spite of various ‘frantic’ promotional campaigns (Kotler et al, 2001). The main companies competing in the iced tea market are now Lipton and Coca-Cola, after various collaborative arrangements which included Nestle and Pepsi.  Coca-Cola is selling Nestea while Lipton offers a variety of flavours.  The companies have engaged in a variety of promotional campaigns and the products are being sold through various channels which include supermarkets and iced cabinets outside shops. Lipton has managed to remain as the leader but it is envisaged that a company from Taiwan will soon enter the iced tea market: Shin Shii. The Taiwanese company produces a range of canned ready-to-drink Iced Teas, such as Kai Shii oolong, which have already proved extremely successful in Taiwan. Shin Shii now face the challenge of introducing consumers to their oolong tea, and taking the market away from current market leaders Coca Cola and Lipton.

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This report will evaluate the present situation in the market in order to identify methods that companies can use to become and to remain successful within the consumer market for Iced Tea.

Therefore the objectives of the report are as follows:

  • To identify the bases which can be used to segment the Iced Tea market.
  • To examine a method which could be used to forecast demand in the Iced Tea market.
  • To identify a market coverage strategy that could be adopted by Pepsi/Lipton.
  • To recommend a marketing strategy for Shin Shii concerning its entry into the ...

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