Part 2 – Lipton
As a leader in the tea market and industry, Lipton has been aggressive in its marketing strategies to ensure competitive advantage. However, there are important things that must be resolved by the organization to avoid market decline due to the current surge of new regional and multinational market players. Of course, Lipton understands the need of timely changes and reactions in the market. And these reactions must be anchored on the following important issues:
* Low Foreign Sales. As much as Lipton works to capture the global tea industry, it fails to gain traction and strength in foreign sales, as noted by the PEST analysis of this paper (U.S. Census Bureau, 2011). The US market is undoubtedly one of the most important markets to gain strength, but the US market alone cannot be considered as the biggest market at par with the global market for tea products. As mentioned above, a quarter of Lipton sales comes from the US market, and other regions only contribute the rest. This means that regional market sales of Lipton are not that impressive in ratio with the US sales.
* Failure to Meet Whole Population Demand. It is important to note that Lipton's competitors are aggressive in their marketing, while Lipton is relaxed about it. Nestea targets the entire population, rather than just a segment market as done by Lipton and Snapple. Yet, Lipton is left in the middle. While Nestea targets the entire population, Snapple targets a clearer segment of the market. But Lipton does not define its real target – the whole population or a market segment of weight loss, or any other. When an organization fails to acknowledge its right market, it results to relaxed marketing strategies.
* Lack of Foreign Manufactures. With its lack of foreign factories and plants, Lipton has to import raw tea products from across different plantations around the world. This means that Lipton's prices are dependent on the economic and political stability of these nations. As a result, the marketing strategies of the company have to change in response to these factors.
Brand Positioning
As noted in this paper, Lipton's marketing strategies have been focused on capturing the middle segments of the market [and it also tries to fight with Snapple in the upper segments]. Being a leader in the tea industry, Lipton has the right to maintain its position in these two levels of the market, with focus on the middle. However, as the market changes, it is time for Lipton to confront Nestea which captures the whole population. This inclusive brand positioning followed by Nestea is easily eroding the market for Lipton because it reaches greater number of consumers.
It is necessary for Lipton to have a better personality because perception of consumers affect buying behavior and brand position (Demiray & Sever, 2011). Analyzing the current personality of Lipton, it can likened to as an aristocratic person who does not know how to behave in the upper class society, yet cannot find footing the middle class. This means that Lipton becomes a global eye for discrimination. And what Lipton fails to do, Nestea does, and Nestea does it too well to capture the lower stratum of the market, and even capturing the next two levels.
Simply, Lipton must be inclusive because its competitors which also offer the same brand attributes such as health and wellness concepts are being inclusive. [The lower and middle class strata of the market are the strongest and the biggest compositions of any food company for luxury of the upper class can solely applied on luxury industries only such as cars.] This means that Lipton must include all members of the whole population as its market segments.
However, it is important to note that this brand positioning strategy should be embraced by Lipton at the expense of its products quality, which had been its asset for several years. It only means making the Lipton product more inclusive by making them affordable through various strategies such as smaller bottles or product. This would make Lipton more appealing to foreign market, especially those in developing countries. With this new strategy, Lipton will be able to improve its marketing impact in foreign markets, and increasing its strength in these markets the same way Lipton has in the US market.
In the same manner, by making Lipton inclusive, the company also needs to work on its foreign sales through the same strategy. It is time for Lipton to reach out to its market and resolve the problem of lack of foreign manufactures. By making Lipton more domestic [view of the foreign sales], consumers of the foreign market would find themselves acquainted with the product. It must be noted that Lipton's success in the US market can be traced to the relationship of the consumers and the product. They find themselves duly attached to the production and creation of Lipton. This is an important competency that Lipton should replicate in its other foreign markets.
In fact, if we look closely at the strengths of Lipton in the US market, the attachment of Lipton with local cultures and tastes is undeniable. This means that Lipton understands the way the US market behaves, but it failed to adopt the same competency in its foreign markets. Nonetheless, the foreign sales of Lipton can be improved through initiatives to improve consumers' perception on health and wellness.
Marketing Mix
This marketing mix will help Lipton to capture and realize its brand positioning goals and objectives. It is necessary to understand that the marketing mix must encapsulate the entire organization and that it can carried on some aspects of the organization.
Product Related. As much as Lipton products are known for their “healthy” features, it is time to expand the attribute of the company. Rather than just being “healthy”, Lipton products must be really for health. By stressing the ingredients behind each product, Lipton is emphasizing the need of buying the product for those who “need” it, and not just for those who “want” to enjoy the tea product. Through this, Lipton can differentiate itself from competitor brands and products that are also stressing on its “healthy” features. For instance, rather than emphasizing on the flavor of Lemon and the healthy ingredients of Lemon as added on the tea product, Lipton can stress on the health benefits of Lemon's Vitamin C. This a direct difference from the way other healthy products see it. Through this, Lipton becomes proactive in delivering to consumers what they need at the moment. As with the example, Vitamin C helps to fight off harmful elements and bacterias by improving immune system.
In the same manner, Lipton has to work on new products that really introduce weight loss market consumers to innovative solutions. The weight loss market is a very big US market segment that still needs to be met. Of course, Snapple is already in the market segment, but Snapple is focused on the upper market. Lipton can introduce products that include Reducol or other cholesterol-fighting elements, or weight-fighting ingredients to its inclusive markets, rather than just the upper segments.
Price. As noted above, the problem with the low foreign sales can be traced to the price of Lipton products. Although Lipton products are affordable, but affordability is a relative term. In fact, even in the US market, Lipton is focused on the middle and upper class only, and the question is how much more with other markets? It is very important for Lipton to make its price tag appealing to all members of the whole market population.
By making miniproducts, Lipton can achieve higher market penetration and reach out low-income consumers (Dayal-Gulati & Jain, 2010). Through this formulation, Lipton does not need to reduce its price and quality, but it just needs to pro-rata the miniproduct with the right prices. This way, Lipton products become more affordable to the lower stratum of the market, and this also allows the company to be more inclusive. At the same time, Lipton can compete with Nestea and other competitors that are capturing the whole market population.
Promotion/Advertising. Lipton already has a strong promotion and advertising schemes and strategies. But with the change of the product stress, the advertising of the company should also change. First, it has to stress on the health benefits of the product. It is recommended for Lipton to education consumers on the health benefits of their products as noted above with the Lipton Lemon flavored-tea. Employment of authorities in health will be good to be included in the advertising and promotions of the company. This can be a good compliment to the employment of various celebrities.
Second, Lipton must work closely with its packaging to ensure that they correspond to the new formulation of strategies. The stress on the ingredients' health benefits must be embedded in the packaging of Lipton products. It is very important to work on the different ways to educate people within the health benefits of Lipton products.
Channels. By keeping the company's distribution channel within the company alone, Lipton is not able to reach out to the market's inner sections. It is recommended for Lipton to create better distribution networks by allowing other companies to market their products to other sections of the market. This is an important value especially with its foreign markets. This will reduce the company's expenses and this will ensure that products reach to consumers in timely manner. In foreign markets, outskirts and the sections of the market are not usually reached due to the urban market distribution strategy of Lipton. With the aid of third parties, rural markets can be penetrated.
References:
812 Foreign Commerce and Aid U.S. Census Bureau, Statistical Abstract of the United States: 2011 Table 1307. U.S. Exports and General Imports by Selected SITC Commodity Groups: 2000 to 2009. (n.d.). U.S Census Bureau. Retrieved June 28, 2013, from http://www.census.gov/compendia/statab/2011/tables/11s1307.pdf
Dayal-Gulati, A. & Jain, D. (2010). Winning Strategies for the Indian Market. Northwestern University Press.
Demiray, U. & Sever, S. (2011). Marketing Online Education Programs: Frameworks for Promotion and Communication. Idea Group Inc (IGI).
