Marketing audit and plan for dimlah

This report consists of a marketing audit and a marketing plan. The findings cater Dilmah with critical information required for the new market development. Dilmah has considered stepping into Egypt with the novelty HERBAL TEA products (Dilmah is an existing tea supplier for Egypt since late 1980’s but did not export herbal products until to date). The ultimate focus of this report is to analyze the market in terms of feasibility and credible advancements which could be implemented by Dilmah when introducing herbal products to Egypt.

The marketing audit elaborates on the socio-cultural analysis, economic analysis, the market as a whole, advertising and promotional elements, consumer buying habits, pricing strategies, in-depth competitor analysis, government participation in the marketplace and so on. Correspondingly the marketing objectives, promotional mix, methods of payment, price determination, channels of distribution, terms of sale etc is covered in the proposed marketing plan.

This report reviews the attitude of the Egyptian market towards foreign products. The desires and requirements of the Egyptians are considered crucial. The study of the beverage usage patterns and health concerns in the country is evaluated with vital importance. This is because the health factor is directly connected to the main attribute of the product; Dilmah will position the product as “consumer health oriented tea”. In the mid 1990’s; consumers worldwide have shifted towards a more convenient mode of consuming beverages. Beverages produced today are completely synthetic and carbonated. The famed topic today in all modes of Media emphasizes the importance of good health. Currently consumers focus on this aspect more than ever before. This environmental condition has created an opportunity for Dilmah to introduce the health friendly herbal tea products. The decision taken for market expansion is favourably credible.

2. Marketing Audit

2.1 Introduction

Dilmah has reached the top of the chart of all SriLankan tea manufacturers who producers and exports tea bags to the globe. 21% of the country’s total exports of tea bags are from Dilmah. Been in a state of high customer loyalty and brand recognition, Dilmah has no fear in introducing herbal products to Egypt since Egypt’s largest tea supplier is SriLanka.

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Dilmah has been in the international trade for the last 21 years. As for the fact that Dilmah is supplying for more than 90 countries around the globe, the next strategy is to provide these consumers with novelty products. Dilmah has placed themselves as a product with integrity and value. The three types of herbal tea products which Dilmah produces are camomile, peppermint, and rosehip. These products are believed to assist the consumers with a healthier life style.

Egypt is the foremost power of North Africa. The country has a great estimated population close to eighty million. Majority of the people live in urban areas of the country. The governmental strategy on attracting foreign investments and market liberalization has resulted in a great number of international trade agreements around the globe. This lead the economy of the country to develop in a rapid pace.

Ahmed Amin Fathallah the Egyptian Assistant Minister of the Foreign Affairs visited Srilanka recently on 14th June 2010; this meeting resulted in a sturdy relationship between both countries. Srilanka and Egypt agreed upon strengthening the bilateral trade affairs within the countries. The Srilankan Tea and Apparel industries were given the opportunity of a wider market access with increased export quotas to Egypt, while the Egyptians have been granted market access to export larger quotas of their citrus and pharmaceutical products into Srilanka. (All Africa, 2010)

2.1.1 Socio-cultural analysis

2.1.1.1History

After the defeat of the Egyptian king Farouk on 1953, Egypt affirmed itself as a Republic. Mubarak embarked on this transformation in the form of reforming the overall process of the political and economical affairs. He contested on the presidential and parliamentary elections in 2005. The Arabization and Islamization aided the Muslim Brotherhood. This resulted in an immense impact on the Egyptian lifestyle and culture. The majority of the population converted to Islam while a large number of Islamic institutes emerged. The Sharia Law was employed afterwards. Muhammad Ali implemented policies somewhat remarkable in the form of promoting Egypt as a country concentrated on the expansion of agriculture, infrastructure, transportation and also enhancing the quality of secular education. (“Egypt History,”n.d.)

2.1.1.2Population

According to the census conducted in 1996, it is evident that Egypt has an overall population of 76.5 million people at a growth rate of 37%. C:UsersAffiDesktopcats.jpg

(State information service [SIS], 2010)

The population in and around the urban areas amplified by 40% and is now standing at 30,949,689;and the population in rural areas are put at 41,629,341.

 Age statistics (Percentage out of total population)C:UsersAffiDesktopcats.jpg

The graph above emphasizes that the age limit of 25 to 45 has a 40% populace out of the total population of the country (SIS, 2010). This is an interesting fact to be considered. Targeting this segment of the population is highly profitable due to the contrasting numbers. The age group above age 45 would also be considered as the secondary market segment.

2.1.1.4 Religion

Islam is the largest and the dominant religion of Egypt. Consumption of Halaal food and beverage are considered obligatory. Dilmah is fortunate enough since their products are classified as halaal. C:UsersAffiDesktopcats.jpg

(SIS, 2010)

2.1.1.5 Language

Arabic is the official written and spoken language of Egypt. Both Egyptian Christians and Muslims use Arabic with no substitute. The marketing campaign should be concentrated towards Arabic for better understanding.

2.1.1.6 Health statisticsC:UsersAffiDesktopcats.jpg

(Nation Master, n.d.)

These statistics demonstrate the fact that Egyptian could not be considered as people with a healthy life style. The health ranking is somewhat low in proportion to other developed countries and developing countries. Dilmah’s Herbal products may assist these figures to improve in time. Dilmah should capitalise on these statistics in the marketing campaigns in order to attract the segmented target audience to shift towards a healthier life style.

2.1.2 Economic analysis

2.1.2.1 Economic statistics and activity

The highly fertile Nile valley runs through Egypt; this is where the major economic activities take place. Egypt’s was a closed economy during the past governments but opened up significantly after President Mohamed Hosni Mubarak came in to power. Cairo the capital city of Egypt assertively implemented economic reforms from 2004 to 2008 to attract overseas investments and to aid a rapid GDP growth. Currently Egypt has detained the economic reforms to be done in future due to the downfall of the global economy. The un-speculated economic crisis made the Egyptian GDP slow down to 4.5%, this resulted in a downbeat effect towards export-oriented sectors, including manufacturing industries and the tourism industry. (“Countries of the world,” 2010).

The government is focusing on resuming the economic reforms to exert a pull on foreign investment, boost growth, and improve economic conditions for the ever increasing population. Though the facts and figures indicate high levels of economic growth during the past few years, the living conditions of the Egyptians remain deprived.

Economic factsC:UsersAffiDesktopcats.jpg

(“Countries of the world,” 2010)

According to the table above the economic indicators prove the fact that Egypt is doing well when considering the other countries and states in the area. The growth rate is speculated to shift towards 6% after resuming the held economic activities due to the economic down fall. The purchasing power parity 470$ Billion is a reasonably favourable amount when considering factors with the GDP. A negative factor to be sensitive on is the inflation rate hitting more than 10% which leads to a situation where people in the country would not want to extend their spending patterns in any other way except for essentials. Dilmah should be sensitive to these factors and position the brand as a Price sensitive product which is affordable by the majority.

International Trade with Egypt: 2010 (JAN- July)

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(SIS, 2010)

The above table indicates the international trade done by Egypt throughout the world. The exports seem to be increasing in numbers where imports are considerably declining. Most of the organisations are manufacturing their own products in the sands of Egypt. Since it’s impossible to be done by Dilmah, It is important that Dilmah holds a positive political and social relationship with the country heads while supplying quality products.

Current Account Balances as per EXCHANGE RATES for the past 6 years. C:UsersAffiDesktopcats.jpg

(SIS, 2010)

NOTE THAT: Figures are as per exchange rates, not in purchasing power parity (PPP) terms.

This chart illustrates the net trade in goods and services + net earnings (rents, interests, profits, and pension funds “From” and “To” the rest of the world during the periods specified.

As indicated, the current account balance in 2010 has a drastic increase when comparing the other trading years. This negative balance does not show a healthy economic condition but when it comes to trading there would not be an effect to Dilmah. In simple terms, people are more in to investing and spending than saving.

Current Account balance as per Purchasing power parity

The current account deficit reduced from $4.4 billion-$4.3 billion in 2008/09, when considering the recent quarter, the deficit extended to $1.7 billion from $994 million. Though these figures are such, It is speculated by all financial institutes in Egypt that the country would move towards a drastic development due to the novel governmental strategies on international trade. Egypt is moving towards a healthy exchange rate while recovering the recent economic hit.

3. The Products

Dilmah produces 3 types of herbal products to suite segregated customer needs.

(1,)Camomile : This product could be classified as a product which brings the consumer a relaxed mood. Camomile flowers are gentle and aromatic which are inspiringly light, golden and delicate. The clear mixture is touched with a fruity note to present a sophisticated infusion.

Ingredients: Camomile Flowershttp://onlineshop.dilmahtea.com/product_images/s/ret65_001__40355_thumb.jpg

Time of usage: Night

Mood: To experience a quality relaxed & distressing mood.

http://onlineshop.dilmahtea.com/product_images/p/ret67_001__86383_thumb.jpg

(2,) Rosehip: A tart penetrating, infusion, its rose red liquor revealing an invigorating beverage.  The Hibiscus tempers the sharpness of Rosehip giving it a slight softness. Ideal taken hot, with a touch of honey or iced with sugar.

Ingredients: Rosehips, Hibiscus Flowers

Time of usage: Day time

Mood: Creates a sense of greatness in the life style.

http://onlineshop.dilmahtea.com/product_images/c/ret66_001__10511_thumb.jpg

(3,) Peppermint: Invigorating, rounded with a gentleness that leaves the palate refreshed and clean. Light, with a sharp minty character and an olive green liquor.

Ingredients: Peppermint Leaves

Time of usage: After meals

Mood: Stress less with a refreshing sense.

3.1.1 Relative advantage: Lack of awareness of herbal products within Egypt has resulted in, wide usage of standard medicine as it is present in the consumer healthcare for an immense period of time. This usage pattern makes the people hesitant to buy herbal products. Herbal products are also expensive, making it unappealing to the majority of the Egyptian population who are living in poverty. (News desk, 2010). This is an advantage for Dilmah. Dilmah’s herbal tea products are relatively expensive, targeting the populace above poverty. It is evident that the herbal product manufacturers in Egypt have a very low voice in terms of advertising and publicity. Dilmah could capitalize on this aspect and dominate the herbal tea market in terms of positioning the herbal tea products as a health caring basic beverage. No competitors make things convenient. Thus, it can be sold at a moderate price enabling the company to capture a higher profit margin.

3.1.2 Compatibility: The life style in the urban areas in Egypt is changing drastically due to the multi cultural social influence. Egypt is moving towards a very fast moving, stressful and busy life style which results in an unhealthy everyday life. Currently the people in Egypt are moving towards a healthy life style due to the new standard of living. The product Dilmah wish to offer seems to be compatible and feasible in the Egyptian market.

3.1.3 Complexity: Complexity relies upon the acceptance by the target market. Changing a life style from tea and milk consumption to herbal tea would not be an easy task. Rival promotional campaigns such as “defects of milk and tea” should be highlighted.

3.1.4 Trialability: The urban population is considerably experimentive when they are aware of a new product. But the rural areas stick to their own customs due to various influences such as religious, social, cultural etc which are disadvantageous.

3.1.5 Observability: This factor relies upon the observable nature of the usage patterns, buyer behaviour, media, and resistance to change. Basically the people in the urban areas are more towards individualism where most of the rural areas are collectivists. These two areas should be observed in different angles. It is convenient to interpret information gained in rural areas due to the high voice on word of mouth, but the unpredictable nature in urban areas makes the task complicated.

3.2 Major problems and resistances to product acceptance based on the preceding evaluation.

Resistance to change: The national drink of Egypt is tea and milk. This is a result of the British invasion. Substituting these products to herbal tea would be a rigid task.

Lack of Awareness: This factor plays a major role when considering tribulations of the product. Dilmah should initiate the entire marketing campaign from the foot. Whereas the employees also should be trained in order to make them well sentient with the product and its attributes.

Credibility: Though it’s widely known that herbal products are good for health, the attitude that people possess is not parallel to it. The various kinds of products in the market claiming to be healthy state the fact that herbal ingredients are inclusive in it. It is more of a common aspect not considered to be interesting or attractive to the customers. This has resulted in negative consequences such as lack of confidence and trust in products claiming to be healthy. Dilmah should be sensitive to this fact when emphasizing the importance of herbal tea usage.

The Market

This section will elaborate current market conditions of Egypt and necessary strategies in order to promote the herbal tea product.

Target market

Target market for Dilmah would be both male and female residence of Egypt who is within the age limit of 25 to 45 with a populace of 40% out of the total population (SIS, 2010). Majority of the labour force is represented in this age category and due to their busy work schedules people tend to buy fast food from outlets which contains a fair amount of chemicals and other sorts of unhealthy ingredients which results in an unhealthy living standards. Since high percentage of people suffers from cholesterol, high blood pressure, hear attacks and other health issues, now the trend is moving towards consuming healthy food which will not be harmful or cause any health issues. Herbal tea is treated as a powerful antioxidant to prevent fatness, cancers, ageing, and cholesterol. The superlative thing about herbal tea is there are no side effects.

Secondary

Primary1.1 Primary target market: Citizens who are between age 25 to 45. Nearly 40% of the population falls under this age group and represent a majority of the labour force who are living busy life schedules and facing many heath issues due to unhealthy consumption of food. (“U.S census bureau,” 2010) C:UsersAffiDesktopcats.jpg

1.2 Secondary target market

Secondary market will be people over age 45 (It is a basic principle that they prefer healthy food and beverages). The tourists who visit Egypt also will be considered. According to the populace census conducted, nearly 20% of population represents this age category. (“U.S census bureau,” 2010).

Geographical region

When considering geographical surroundings Egypt is a tactical location for an organization to put into practice its business operations for the reason that it connects north eastern Africa and Sothern western Asia. This will be a good turning point for Dilmah to expand its global operation in the future. As the current trend in food and beverage consumption people are moving towards more healthy foods in search of high life expectancy. In Egypt life expectancy at birth is nearly 72 years and there is nearly 70% of population who belongs to age category of 15-64 which means there is a greater portion representing working and aging population (“U.S census bureau,” 2010).

Forms of transportation and communication available in Egypt

Transportation and communication process in Egypt, show a high level of development and wide range of coverage which will facilitate businesses to maintain a productive distribution process. There are various types of transportation in Egypt such as high ways, airports, ports and harbors, heliports and merchant marines. Egypt holds six harbors and ports namely Ayn Sukhnah, Alexandria, Damietta, El Dekheila, Sidi Kurayr and Suez and sixty seven merchant ships including passenger, cargo, bulk carriers, container ships and etc. Even more there are eighty five air ports and six heli ports to ease business operations. (“Jewish virtual library,” 2010).

When considering communication forms in Egypt there are nearly 12 million telephone main land line users and 55 million of mobile users. Nearly 98 television broadcast centres and 60 radio broad cast stations are in use in Egypt. Internet is used by majority of the population and there are nearly 177443 internet hosts with 11 million of internet users (“The fact book: About Egypt,” 2010). The forms of communication and transportation in Egypt seem favourable in terms of a business proposition, due high level of infrastructural and technological development.

Consumer buying habits

The educated and the urban populace have acculturated the need of healthy food consumption. Egyptians spend a higher percentage of their household income on food, groceries, entertainment, personal care products and health related products. Dilmah is focussing on and hoping to convert the people into consumers who seek healthy products and who are willing to allocate a proportion of their budget to help achieve a superior healthy condition.

4.1 Product-use patterns

The usage patterns of Herbal products does not seem to be favorable due to various reasons such as lack of awareness, lack of trust and credibility, affordability and most importantly due to use of substitute products which are direct pharmaceuticals.

4.2 Product feature preferences

Dilmah herbal tea will be positioned as a health product which will prevent cholesterol, ageing, risk of cancer and other sort of common long term health issues and since no sugar is required to use this product it will be highly accepted by the Egypt residence that are more health conscious.

Furthermore this product can be use as a regular beverage instead of tea and in the other hand it gives customers an opportunity to use this product as a day to day medication.

4.3 Shopping habits

Current researches have pointed out that Egypt residence will purchase tea weekly basis and according to the government statics there are 80% of residence above the poverty line so customer will shop in discounts stores, super markets, shopping molls, convenience stores, super store and etc. There for Dilmah could have extensive distribution in these specified outlets.

Distribution of the product

Dilmah will open a business unit with a marketing department in Egypt in order to ease the business operations.

5.1 Typical retail outlets

Typical out lets for Dilmah herbal tea will be super markets, convenience stores, mini markets in petrol stations, air ports and especially exclusive Dilmah outlets.

5.2 Product sales by other middlemen

Apart from those typical outlets Dilmah will be focusing on selling its products through hotels, health spa resorts and pharmacies.

6.0 Advertising and promotion

6.1 Advertising

Dilmah is well known among Egyptians as a tea producing organization. Dilmah has a grand goodwill as a company with quality products. Srilanka is second largest exporter of tea to Egypt. Dilmah should heavily focus on television; radio and internet broadcasts since the introduction of novelty herbal products should be emphasized for wider awareness. A great number of population could be covered by using these forms of communication modes. Basically television channels and radio stations will be selected according to local ratings and social networks such as facebook fan pages, email advertisements will be done in a more diminutive manner. These forms of advertising will be more effective within our primary target market which represent people within age 25- 45 because their involved in these modes of communication. Additionally we will use banners and billboards inside air ports, shopping malls and tactical places like junctions and streets where lots of people are in motion. Print media would also be used as a reminder when these promotional campaigns are over.

6.2 Sales Promotions

Special sales promotions will take place within first few months in order to create responsiveness about the product so Dilmah will conduct promotions in places like super markets and shopping molls and free trials and discount coupons will be given in order to attract new customers. Since Dilmah is going to position it’s product in herbal product category, Dilmah will be focusing on sponsoring seminars, workshops and other social events such as the World Health Day to promote awareness and to create a positive attitude towards Dilmah.

Pricing strategy

7.1 Customary mark-ups

Dilmah is introducing herbal tea for the first time in Egypt, mark ups should not be high though there is a great operational and promotional cost to bare. Mark ups could increase in proportion to the demand in the upcoming trading quarters. Dilmah will match its pricing strategy with consumer price inflation rate and in the long run will reduce the price to increase the ability to compete when other competitors emerge with high promotional voices.

7.2 Types of discounts available

Striking discounts would be given to both end users and middlemen during the first few months of trading; this may generate customers and create loyalty due to the price sensitive nature. Discounts will come in forms of bulk purchasing, special discount price during the promotional period and other trade discounts for retailers.

8.0 Product Comparison

The varied product identification and product comparison would allow Dilmah to launch their range of “Herbal Tea” brews, much effectively and efficiently as the clear understanding of direct and indirect competitors, pricing, best practised and most effective advertising and promotional strategies etc. The tea exporting industry in Egypt was revolutionized since 1992 where heavy import duties were charged specially whilst dealing with the Asian continent which in turn increased Tea imports from Kenya. At the present it could be identified as one of the growing markets with a vast number of companies launching and developing themselves as Tea marketers.

8.1 Competitor Products

Brand Names.

The leading “El – Arosa” dominates the market with a share of 40% inescapably ahead of others. Lipton the world’s best known tea comes with a share of 20% in the market place, other existing brands are namely, El – Salam Tea, Al Jawahara, Shai Kedah, El – Annay, Yogi Tea, Cairo Tea, Twinning, Superfine and Ahmad Tea. These brands could be considered as DIRECT competitors though they do not produce or distribute herbal tea. Tea is what Dilmah is hoping to substitute with Herbal tea, since the market is dominated by other brand leaders who are tough to over ride. Dilmah is particularly focusing on ‘Herbal Tea”, this is a competitive advantage.

Features

Tea, being a vast area of study apart from the variety of tastes and flavours each competitor focuses mostly on, the features are quite similar. Every particular brand concerns on black tea, where as the direct competitors of ” Herbal Tea” in specific looks into bringing out a bigger variety than the others with the inception of new herbal flavours and enrichments. The added enrichment of medicinal herbs as well as the effect of green tea in order to minimize antioxidants and cholesterol levels in Herbal Tea can be known as the most commonly advertised feature in all brands producing herbal tea. The Iced tea category also comes with features as sugar free or fat free, decaffeinated etc

Packaging

Nearly every brand of Tea comes is with the usual packaging of loose tea in boxes ,tin containers, tea bag, sachets etc. All the brands would make themselves stand out between the others by having an attractive packaging. The packaging of different tea varies according to their potential customer segments levelling it from the higher class to middle class in the society and better packaging to suit their needs. Focussing more on teenagers and youngsters, the Iced Tea is packaged in a plastic bottle so that it can be consumed as a soft drink. The language that is used on the packaging also is mostly English whereas the tea packeted in Egypt comes in English as well as Arabic which is the official language of Egypt.

http://www.elarosatea.com/ar/images/pro_iamges/naem_40G.jpghttp://www.elarosatea.com/ar/images/pro_iamges/naem_100G_larg02.jpghttp://t2.gstatic.com/images?q=tbn:qWc2pzcI1OR9LM:http://www.minimus.biz/images/F20-1826912-0000bg.jpg&t=1

8.2 Pricing

The pricing of different brands vary according to the packaging, market segment they reach for etc, for instance it could be categorized as premium brands which take a higher price that the packed tea to the middle class consumers. The pricing differs from the weight of the contents of each packaging namely 100g, 200g, Box with 20 tea bags etc. The general pricing of Tea would be between $2 to $38.A “Lipton” Box of 100 Tea bags would be approximately around $4.85 whereas a “Yogi Tea” box of 16 tea bags per 3 pack is priced around $13.39. (The Find, 2010).

8.3 Promotions and Advertising

The main methods of advertising in Egypt are through print media and broadcast media. TV commercials, Radio adverts, news paper, magazine and billboard advertising would be some of them. Apart from the main methods of commercial advertising, websites also advertise their products irrespective limiting it only to the particular region but having translations to make the consumers grasp the meaning and details better. Many tea promotional campaigns exist in the Egypt due to the high usage of tea. (The Economic Times, 2010), TREES, LIPTON GREEN TEA, JWT Cairo, UNILEVER, Print, Outdoor, Ads

Lipton spent an immense amount in advertising their sachet packets in Cairo, Tree bushes were cut in the shape of tea cups and was put in a tag of Lipton sachet packets. This campaign was highly successful.

4.9 Market size

Egypt is the largest market for tea in the Near East of the African continent. Consumption in 2003 was close to 77,400tonnes entirely imported. The mainstream imports are in mass bulk for repackaging and amalgamation in the shores of Egypt. Imports of ready to sell, retail-packed tea products have remained very low in terms of volume. Tea blending plants are situated in the free trade zones around and within the Delta areas of Egypt. (Cooperate document repository, 2005)

4.9.1 Estimated industry sales for the planning year

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The global recession affected the Egyptian tea industry to hold imports of tea from Kenya and Srilanka. However, the market is expected to rebound with the recommencement of the held economic reforms on the tea industry. It is expected according to past sales patterns that the tea industry would grow from 1.6% to 3%. (These figures are speculated by the audit team of this marketing audit, with the assistance of the past records).

4.9.2 Estimated sales for your company for the planning year

Mr. Fernando the owner of Dilmah, has successfully gained an after-tax profit of Rs.1.2 billion in the year ended March 31, 2010, nearly double the Rs.519.8 million earned in the previous year (2009) on an improved turnover of Rs.4.9 billion, up 11% from the previous year. (SriLanka Sock picks, 2010)

According to these conditions it could be speculated that Dilmah could increase it s market share even more widely due to the new market development: e.i introduction of herbal tea to the Egyptian market. A 11% growth rate of Dilmah in the previous year was with the hesitance of the economic recession. Looking in to the advantageous market in the world today we could easily speculate a 18% growth rate.

Government participation in the marketplace

Any business involved in international trade should abide by the rules and regulations imposed by the government of the home country and the host country. The SriLankan Government facilitate exporting industries by providing various services such as subsidies, bilateral trade agreements politically, port free taxes and much more.

Agencies

Srilanka Tea bored: Sri Lanka Tea Board is the body responsible to promote tea locally and internationally. The representatives also monitor the quality of tea in a random schedule. Dilmah has been exporting tea for more than 21 years to date, the membership number of Dilmah is 651. Quality standard certificates are also given by the SL tea bored.

Export development bored: Clearly this government body help assist development of companies who are currently in the export trade and the organisations striving to achieve it.

National Chamber of Commerce of Sri Lanka: All industries involved in international trade should get a license from the chamber of commerce to commence international trade. The license should be renewed every year. A great deal of research data and advisory is provided by this government body.

Sri Lanka Customs: The products exported would be carefully monitored