GREEN TEA PRODUCT LAUNCH

Group Members:
Faiza Hammad Sandeela Hina Murad Somani Aamir Rafiq Owais Akram Ali Mohsin

Acknowledgment

We are thankful to God Almighty who has given us the abilities to do share hard work and enthusiasm to perform well. We owe a special depth of gratitude to our generous teacher. We would like to express our deep gratitude to Mr. Altamash Pervaiz who guided us throughout our research which groomed us in the art of identification and statement of issues, problems and concerns; determination of the parameters for purposes of in depth inquiry; drawing of a blowups of all the reluctant knowledge in order to reach a synthesis or a reasoned out point of view at the end. And we are sure that these things that we have learnt in his guidance would play a vital role in making our future bright.

TABLE OF CONTENTS

1. 2.

Objective Methodology

4 5

Market Research Data Gathering and Interpretation 3. 3C Analysis (Customer, Competitor & Company) 4. Market Segmentation 10 14 18 18 19 27 27 9 10

5. Market Targeting 6. Positioning of Green Tea 7. Place

8. Promotion 9. Cost & Financials 10. Price 11. Contingency Plan

Objective

To successfully launch a new brand of green tea in Karachi and capture 20% market share
of Tea in a period of 5 years, keeping in view competitors strategies and consumer requirements.

Methodology
Following is the methodology, we used for our product:

Market Research
It has been done through Survey. Below are the survey results:

Profession

Area of Residence

 Gender

Age

Tea

 How often you take tea

Black Tea Health Benefits

Benefits of Tea

 Green Tea

Green Tea intake ratio

Green Tea Brands

 Why Green Tea

Data Gathering and Interpretation

Statistical Analysis
People will try new green tea brand offering better taste, color and packaging, and change current brand of green tea? (16-35 age) Hypothesis People will try new green tea brand offering better taste, color and packaging, and change Ho current brand of green tea? People will not try new green tea brand offering better taste, color and packaging, and H1 change current brand of green tea? Data Yes NO 168 53

3C Analysis (Customer, Competitor & Company)

Our Customers are Tea consumers and Health conscious want to remain Activeness, slim smart, etc. Our local Competitors are Lipton by Unilever and Tapal. Others imported least competitors are Tetley, Dilmah, etc. Competitors major reliable on Black Tea and did not introduce green tea because dont want to cannibalize their product with green tea. Our Company should be monetarily strong company with major investment and will not already into Tea business but can in food industry. Also, will have ease in distribution E.g Engro Foods.

Market Segmentation
Below are our Green Tea Demographics:

We focused on Age Segmentation between 16-35 because this age group is most Health Consciousness; want to remain active and look slim and smart. Also they are the more Tea Consumers.

Market Targeting
After the process of segmentation the next step is for the organization to decide how it is going to target these particular group(s). There are three targeting options an organization can adopt. Option 1 Undifferentiated Marketing - Sometimes referred to as mass marketing the firm may decide to aim its resources at the entire market with one particular product. Coca Colas original marketing strategy was based on this form. One product aimed at the mass market in the hope that a sufficient amount of buyers would be attracted, although there are now changes in their product line to cater for growing dietary and caffeine free needs of consumers.

Option 2 Differentiated Marketing Strategy - Where the firm decides to target several segments and develops distinct products/services with separate marketing mix strategies aimed at the varying groups.

Option 3 Concentrated Marketing: Where the organization concentrates its marketing effort on one particular segment. The firm will develop a product that caters for the needs of that particular group.

After studying all the mentioned strategies we now focusing on the e result we have concluded from the survey:

Potential Market for Tea

Age Group Population Ratio Total Population of Karachi Target Population Avg. Black Tea Cups/Day Total Cups / Day Total Cups / Day Amount of Tea / Cup Totals Grams / Day Total Kgs 16-25 21.84% 14,500,000 3,166,800 1.76 5,582,156 11241329 2 Grams 22,482,657 22,483 2,247,500 2.52 5,659,173 26-35 15.50%

Current Market for Green Tea

Age Group Population Ratio Total Population of Karachi Target Population Avg Green Tea Cups/Day Total Cups / Day Total Cups / Day Amount of Tea / Cup Totals Grams / Day Total Kgs 16-25 21.84% 1,7478,582 3,817,322 0.40 1,513,578 2,781,760 2 Grams 5,563,520 5,564 2,709,180 0.47 1,268,182 26-35 15.50%

Potential Market for Green Tea

Age Group Population Ratio Total Population of Karachi Target Population Avg Black Tea Cups/Day Total Cups / Day Total Cups / Day Amount of Tea / Cup Totals Grams / Day Total Kgs 16-25 21.84% 17478582 3,817,322 1.76 6,728,839 13,550,516 2 Grams 27,101,032 27,101 2,709,180 2.52 6,821,677 26-35 15.50%

Combining the result: To conclude the share of green tea Total Tea Market Share of Green Tea Potential Market for Green Tea = = = 27,098 kg 17% 83%

OPTION 3: SELECTED AS MARKET TARGETING:

The pictorial view concluding the target market Re-emphasizing that these results are concluding: on the bases of questionnaire survey floated in all age groups & mystery shopping at different marts.

Green Tea Potential (16-35 Age) Current Market Potential Market 17% 83%

Tried Green Tea? (16-35 Age)

Yes No 88% 13%

Would Try New Green Tea? (16-35 Age)

Yes No 75% 25%

Positioning of Green Tea

Health Factors
Burning calories is not easyit takes a lot of energy and effort to remove huge amounts of fat, but with the help of green tea extracts you can easily speed up the burning process. Researchers have discovered that drinking a cup of green tea daily will boost your metabolism from 8 to 14 percent, thats why they highly recommend it to those who are looking for a quick method to lose fat. The health benefit of green tea does not stop there. New generation has great emphasis on health and being slim and reduces fat in the age of 1635. Hence looking at the trend of being Green and slim in this age group, Health is being chosen to position upon. It leads to one single product that is Green Tea. Following are the results of research conducted to verify the existing picture of Green Tea that matches to what we are going to position our New Brand on.

Rating (16-35 Age)

Type Green Tea Black Tea Health 4 3 Taste 3.44 3.5 Color & Smell 3.43 3.45

Usage Level
Black Tea has the image of ACTIVENESS, while the youth of age 16 and above are naturally active and are not attracted to drugs that increase activeness. But they are more conscious of being SMART and healthy. So Green Tea is made for them.

Votes for different Usage Level of Black Tea

Used To Activeness Healthy No benefit Other 99 151 7 46 10

Product
Suggested Brand Name

Sandeela Green Tea Camellia Green Tea

Availability

Tea Bags Family Pack Jumbo Pack for Restaurants

Products Lipton Jasmine Lipton Mint Lipton lemon Tapal Jasmine Tapal Lemon Camilia Green

Taste positioning X

Taste to Health Positioning X X X X X

Cool Green

Place
Distribution

Multiple channels
o

Level 2 and level 3

Efficiency of already available distribution channels of investor.

Promotion

Channel Ary Digital Geo Super Samaa TV Facebook FM107

Rates 60000 8000 30000 0.01 800

Timings Prime Time During Match Morning show 9-12am Morning/Midnights

Impressions No of day to Total imp / yr / day use 5 10 5 8640 20 8 2 10 30 6 480 240 600 3110400 1440

Cost 28,800,000 1,920,000 18,000,000 31,104 1,152,000

Total advertising and promotional cost per annum Total first year production in KGs Sunday 15cm x 8 Cost/KGs of production 344520 cols Initial Intro Distribution 41.47 -

1 10000

4 30

52 300000

17,915,040 12,441,000

Total advertising and promotional cost per annum

80,259,144

Total first year production in KGs Cost/KGs of production

547,500 146.592044

 Cost & Financials

Green Tea Production Costing

In order to get the actual production costing to launch a green tea brand in Karachi, we get the current and potential market from survey conducted. On the basis of results of surveys, the current consumption of green tea potential consumption is found as mentioned in below detail.

Variable Cost of Production

Direct Material Cost
Green tea is an imported item; readily available in the market in open form. Following is the cost of green tea for bulk purchase. Material involved are acquire the following cost Material Cost Green Tea Rs. 275/Kg SKU Tea bag (24 tea bags/box) Small pack Weight of green tea (gm) 1.5gm/tea bag 200gm Cost (Rs/sku) 9.9 55 Remarks 1.5gm per tea bag and one box contain 24 tea bags 200 grams per box

Packaging Cost Green Tea is available in following five sku's in the market. The packaging cost of these sku's are as follow SKU Packaging material Cost/SKU Remarks Tea bag (24 tea Filter paper+thread+tag+paper bags/box) box+carton 26 Open market rate for packaging Silicon foil+Printed paper Small pack box+carton 10 Open market rate for packaging

Fixed Cost of production

Following fixed cost that will incurred when installing a production capacity for green tea production. Payback period is kept 5 years for all machinery installed Mixing/Crushing Chamber Purpose To perform mixing of green tea in raw form to ensure the consistence taste in all production Calculation Remarks Cost of machine Rs. 100,000 Payback 5 years Production 1000 Kg/day (8 hours shift) consumption for green 1500 Kg tea per day Number of machine 2 required Machine cost*number of Machine/(prd per day*no. of Cost in Rs/kg 0.05 Machine*365*payback period). Filling/Packing Machine Purpose To fill defined quantity of sku and pack sealing it. Calculation Cost of machine Rs. 600,000 Payback 5 years Production 7000 sku/day (8 hour shift) consumption for 1500 kg green tea Number of machine 4 required Cost in Rs/Sku 0.05

Remarks

Machine cost*number of Machine/(prd per day*no. of Machine*365*payback period)

Shrink Wrap Machine Purpose Wrap the sku with polypropylene. Cost of machine Payback Production consumption for green tea Number of machine required Cost in Rs/Sku Calculation Rs. 150,000 5 years 4800 sku/day (8 hour shift) 1500 kg 6 0.02 Machine cost*number of Machine/(prd per day*no. of Machine*365*payback period) Remarks

Carton Packing Machine Purpose To pack sku in single unit for distribution Calculation Cost of machine Rs.50,000 Payback 5 years Production 4800 sku/day (8 hour shift) consumption for 1500 Kg green tea Number of machine 6 required Cost in Rs/Sku Direct Labor Cost Staff Production Maintenance 0.0003

Remarks

Machine cost*number of Machine/(prd per day*no. of Machine*365*payback period)/sku per carton

No. of employees 10 5

Avg salary 10000 10000

Total salary 100000 50000

Cleaning

10

7000 Total direct labor cost per year Total direct labor cost per kg (total DL cost/total annual production in kgs) Avg salary 50000 Total selling & admin cost per kg (total S&A cost/total annual production in kgs)

70000 220000 0.40

Marketing and selling staff Staff Marketing and selling

No. of empolyees 20

Total salary 1000000 1.826484018

Total cost of product including direct material, direct labor, factory overhead and marketing and selling expense Sku Tea bag (24 tea bags/box) Small pack 200gm Tea bag (24 tea bags/box) Small pack 200gm Tea bag (24 tea bags/box) Small pack 200gm Direct material/sku 35.90 65.00 Selling & Admin 0.07 0.37 Retailer Margin 5% 3.00 6.00 Manufacturing over head 1.19 0.09 Advertising Expense 5.27 29.30 Total cost 37.11 65.17 Direct labour 0.01 0.08 Distribution & shelves accupying cost 1.00 1.00 Retail price 60.00 120.00

INFLOWS AND OUT FLOWS OF PROJECT Total Investment in PKR Total Machine Cost 3,800,000.00 Total variable cost per (tea 45.25 bag sku) Total variable cost per kg (tea 1257.061644 bag sku) Total variable cost per 101.75 (200gm sku) Total variable cost per kg 508.7283105 (200gm sku) Weighted average cost of two 882.8949772 sku First 3 month investment in 119,190,821.92 1133.333333 variable cost Total investment of first three 122,990,821.92 month Total price per kg (tea bag 1,666.67 sku) Total price per kg (200gm 600.00 sku) Weighted average price per 1,133.33 kg Based on our current marketing and promotion, the expected return of sales starts from fourth month Month 4 5 6 7 8 9 10 Accumulated Out flows 162,721,095.89 202,451,369.86 242,181,643.84 281,911,917.81 321,642,191.78 361,372,465.75 401,102,739.73 Accumulated in flows 51,000,000.00 102,000,000.00 153,000,000.00 204,000,000.00 255,000,000.00 306,000,000.00 357,000,000.00 Accumulated net flows -111,721,095.89 -100,451,369.86 -89,181,643.84 -77,911,917.81 -66,642,191.78 -55,372,465.75 -44,102,739.73 1666.666667 600

11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43

440,833,013.70 480,563,287.67 997,056,849.32 1,084,463,452.05 1,171,870,054.79 1,259,276,657.53 1,346,683,260.27 1,434,089,863.01 1,521,496,465.75 1,608,903,068.49 1,696,309,671.23 1,783,716,273.97 1,871,122,876.71 1,958,529,479.45 2,745,188,904.11 2,864,379,726.03 2,983,570,547.95 3,102,761,369.86 3,221,952,191.78 3,341,143,013.70 3,460,333,835.62 3,579,524,657.53 3,698,715,479.45 3,817,906,301.37 3,937,097,123.29 4,056,287,945.21 4,985,976,356.16 5,129,005,342.47 5,272,034,328.77 5,415,063,315.07 5,558,092,301.37 5,701,121,287.67 5,844,150,273.97

408,000,000.00 459,000,000.00 510,000,000.00 561,000,000.00 612,000,000.00 1,458,600,000.00 1,570,800,000.00 1,683,000,000.00 1,795,200,000.00 1,907,400,000.00 2,019,600,000.00 2,131,800,000.00 2,244,000,000.00 2,356,200,000.00 3,366,000,000.00 3,519,000,000.00 3,672,000,000.00 3,825,000,000.00 3,978,000,000.00 4,131,000,000.00 4,284,000,000.00 4,437,000,000.00 4,590,000,000.00 4,743,000,000.00 4,896,000,000.00 5,049,000,000.00 6,242,400,000.00 6,426,000,000.00 6,609,600,000.00 6,793,200,000.00 6,976,800,000.00 7,160,400,000.00 7,344,000,000.00

-32,833,013.70 -21,563,287.67 -487,056,849.32 -523,463,452.05 -559,870,054.79 199,323,342.47 224,116,739.73 248,910,136.99 273,703,534.25 298,496,931.51 323,290,328.77 348,083,726.03 372,877,123.29 397,670,520.55 620,811,095.89 654,620,273.97 688,429,452.05 722,238,630.14 756,047,808.22 789,856,986.30 823,666,164.38 857,475,342.47 891,284,520.55 925,093,698.63 958,902,876.71 992,712,054.79 1,256,423,643.84 1,296,994,657.53 1,337,565,671.23 1,378,136,684.93 1,418,707,698.63 1,459,278,712.33 1,499,849,726.03

44 45 46 47 48 49 50 51 52 53 54 55 56 57 58 59 60

5,987,179,260.27 6,130,208,246.58 6,273,237,232.88 6,416,266,219.18 6,559,295,205.48 7,433,361,232.88 7,592,282,328.77 7,751,203,424.66 7,910,124,520.55 8,069,045,616.44 8,227,966,712.33 8,386,887,808.22 8,545,808,904.11 8,704,730,000.00 8,863,651,095.89 9,022,572,191.78 9,181,493,287.67

7,527,600,000.00 7,711,200,000.00 7,894,800,000.00 8,078,400,000.00 8,262,000,000.00 9,384,000,000.00 9,588,000,000.00 9,792,000,000.00 9,996,000,000.00 10,200,000,000.00 10,404,000,000.00 10,608,000,000.00 10,812,000,000.00 11,016,000,000.00 11,220,000,000.00 11,424,000,000.00 11,628,000,000.00

1,540,420,739.73 1,580,991,753.42 1,621,562,767.12 1,662,133,780.82 1,702,704,794.52 1,950,638,767.12 1,995,717,671.23 2,040,796,575.34 2,085,875,479.45 2,130,954,383.56 2,176,033,287.67 2,221,112,191.78 2,266,191,095.89 2,311,270,000.00 2,356,348,904.11 2,401,427,808.22 2,446,506,712.33

 Price
Maintaining same price as Black Tea Justifying cost Cannibalization (Motive)

Retail price

Tea Bags X 24 o Rs 60.00

Family Pack 200gms o Rs 120.00

Contingency Plan
Ice Green Tea

SKUs of different flavors already available