Competing Neck To Neck With A Formidable Multinational Marketing Essay


Tapal is a reflecting illustration of a successful trade name, born in Pakistan, viing cervix to make out with a formidable multinational. Pull offing Director of Tapal Tea ( Pvt. ) Ltd. , Mr. Aftab Tapal belongs to a 3rd coevals concern household.

Mr. Aftab Tapal, a well-trained tea taste tester and tea cognoscente himself, introduced new tea constructs and developed a broad scope of tea blends providing specifically to the gustatory sensations of people throughout Pakistan. Aftab Tapal defines success as balanced and timely determinations, distinction, honestness and clear focal point aim. His vision is to do Tapal the benchmark for quality, creativeness and ethical values[ 1 ].


Tapal is neither a rags-to-riches nor an nightlong success narrative. Adam Ali Tapal, gramps of Aftab Tapal, started the company in Karachi in 1947 from a little store in Jodia Bazaar ( now called Tapal House ) . With difficult work of Adam Tapal, he innovated a new blend of foliage and dust. The multinationals laughed at his thought because they believed that foliage should non be blended with dust. But Adam Tapal did it and his gustatory sensation buds of Karachiites, doing it really popular. In early 60s, the dominant participants were the multinationals and merely two local trade names, Ispahani and Adams ( Tapal tea ) . By that clip another large group had already come and gone ; that was Aroma, which belonged to the Adamjees.

In 1977, Aftab Tapal joined the company and went into distribution, stigmatization and packaging. His part to concern was Dander, a wholly new class of tea. Tapal tea was the first to present it. It became so popular that about all the tea companies started copying the blend and the class. Even the multinationals joined the trade name waggon and they all started naming their version of the tea Dander excessively. Dander is a farinaceous tea, somewhat larger than tea foliage. Dander is bolder and has more spirits, although it is non every bit strong as tea foliage.

After fall ining the company, one of the first things Aftab Tapal noticed was the figure of people line uping up at our store in Jodia Bazaar to purchase tea. He began listening to their remarks. What he kept hearing was why did n’t we open a store in Nazimabad or Malir? This meant that clients wanted the convenience of handiness. That is when we decided to trade name our tea, appoint distributers and convey our to our clients ‘ doorsill. He is really proud of the fact that when they started distribution, we bypassed the terminal system. Until so Lipton, Brooke Bond, Ispahani all had terminals[ 2 ].

Trade names PORTFOLIO

Family Mixture



Tapal Safari Chai



Jasmine Green Tea



The history of tea imbibing in the subcontinent can be traced far back. It is said, that tea was introduced with the reaching of the British in the Subcontinent and became popular in the part during the British regulation. The British people were clever plenty to utilize a powerful motto, which remained in the heads of the people. They said, “ In winters it provides warmth and in summers, it gives freshness. ”

Over a period of clip, the colonials improved the quality and gustatory sensation of tea. Mr. Thomas Lipton was the cardinal individual who introduced the aromatic soothing foliages, to the common adult male at low-cost monetary values. This is one of the chief grounds why “ Lipton ” even now is one of the most good known trade names of tea in this portion of the universe.

At present there are two sorts of tea available in the market: branded and unbranded ( loose ) tea, the ratio is ( 55:45 ) severally. Therefore, the importers are besides of two types, though both import tea from the same states. Bulk importers sell tea to retail merchants in loose signifier, while the 2nd class of majority importers sell packaged tea under trade name names.

Unilever enjoys leading with about 54 % of Pakistan ‘s tea market. Tapal stands out as the major rival for Unilever with 28 % portion. Tetley tea, a joint venture b/w Lakson Group and Tata tea of India, was introduced early this twelvemonth and it has about 4 % portion, which is continuously diminishing. Other participants in industry are Kohinoor Tea Company, Vital Tea Company and Alpha Tea Company. Last twelvemonth Tea ingestion in Pakistan is summarized below:

Tea Consumption in Pakistan ( in dozenss )











Entire Consumption


Beginning: gross revenues in dozenss of Unilever, Tapal & A ; Tetley are taken individually from each company. Entire ingestion is taken from Pakistan Tea Association ( PTA ) .

This gives us branded tea market of about 85,250 dozenss. The branded market can be divided by each participant as follows:

Capsule: A booming nutrient concern

A twosome of securities firm houses reported this hebdomad that Lever Brothers Pakistan Limited had made a “ steadfast command ” to take over Tapal Tea ( Pvt ) Limited. With both Lipton and Brooke Bond already in its crease, Lever enjoys leading with 45 % of Pakistan ‘s tea market. Tapal stands out as the major rival for Lever with 25 % portion.

Lever Brothers Pakistan has denied that it was in advanced negotiations for coup d’etat of Tapal, for that would give it a commanding 70 per cent portion of the tea market. Such an act would necessarily stir the Monopoly Control

Authority into action as happened when Dewan Salman acquired Dhan Fibres, which together brought over 51 per cent of the polyester basic fiber ( PSF ) market in the group ‘s clasp.

Earlier, Lever Pakistan had seen the potency in the ice-cream market and bought over Polka, which together with its ain Wall ‘s, has established the company steadfastly in the ice pick concern. iˆ?

The writer of above article is Dilawar Hussain. It was published in DAWN, concern page, on September 18, 2000.

Approximately more than 10-15 % of annual ingestion is being received by bootleg tea. Imported tea through illegal channels enters Pakistan chiefly from Land paths b/w Pakistan & A ; India. The bootleg tea has some bad deductions for industry, which will be discussed in following subdivision.

Industry GROWTH

Tea industry is turning at a slow rate about equal to population growing rate. Per capita tea ingestion in Pakistan, which is about 1 kg, is non increasing. Pakistan tea market is still really attractive which is evident from the fact that Sri Lankan and Indian are continuously negociating with Pakistani Government for liberalisation of tea import. And Lakson Group entered into a joint venture with Indian Tata Group for presenting Tetley tea in Pakistan. Had n’t it is non an attractive one these developments have n’t taken topographic point.


Pakistan is the 3rd largest consumer and importer of tea in the universe. Pakistan is merely below the United Kingdom and Russian Federation on planetary imports. Pakistan imports about 140,000 dozenss of tea every twelvemonth. African states account 65 % of Pakistan ‘s tea imports[ 3 ]. More than half of Pakistan ‘s tea demand is met by Kenya, which exported 64 million kilogram to Pakistan in 1999[ 4 ]and other subscribers to tea imports in Africa are Uganda, Burundi and Tanzania. The other major tea providers to Pakistan are Sri Lanka, India, and Bangladesh[ 5 ].

Relationss between Pakistan and India has ever affected trade between two neighbours and so the trade of tea. India is ever acute to come in Pakistani tea market because monetary values are somewhat low due to no cargo charges.

In July 2001, when President Musharraf visited India, Political differences were kept on the top of docket. During that Musharraf-Vajpayee acme, Indian Industrialists pursued Indian Government to set trade ties on top of docket. Tea exports to Pakistan were primary point in those trade negotiations. India, the universe ‘s biggest tea manufacturer, was trusting to catch a larger piece of the immense Pakistani tea market4. But as we know that the acme was a failure and both leaders were unable to make a consensus. All trade ties came to an terminal and Pakistan lost a inexpensive tea importer.

But in 2003, when dealingss between two states improved, Lakson Group entered into a joint venture with Indian Tata Group for presenting Tetley tea in Pakistan. And industry scenario started to alter. We hope that predominating good dealingss b/w two states may convey inexpensive tea in Pakistan.


As mentioned earlier, Pakistan is 3rd largest importer of tea and tea imports form a important part of our entire import measure and it is shown as a separate in SBP one-year study & A ; Economic study of Pakistan. One can reason that how much foreign exchange load tea imports have on state ‘s balance-of-payments. Government of Pakistan ( GOP ) has besides levied import responsibilities on tea imports to gain gross. High import responsibilities have led to crisp addition in bootleg tea. Talking in a seminar on Intellectual Property Rights in Pakistan for journalists, Muhammadi Miabhoy, Deputy Managing Director of Tapal Tea ( Pvt. ) Ltd. said that tea smuggling had shot up 46 % in 2002 due to the high import responsibility on the trade good. One functionary of the Pakistan Tea Association said the Rs 28 billion local tea industry is fast losing its market portion to the smuggled tea[ 6 ].

Tea Import Bill

( Value in million US $ )



Percentage alteration































Beginning: SBP Annual studies


Few latest developments in Pakistan ‘s tea industry are follows:

Government has slashed imposts responsibility on tea import from 10 % to zero in Federal Budget 2004-05 as remedy step against smuggled tea.

Pakistan and Sri Lanka has late signed a Free trade understanding ( FTA ) . Pakistan has agreed to a demand of Sri Lanka to convey down the imposts responsibility on tea to zero in exchange of nothing rate export of rice and murphies to Sri Lanka under the proposed pact. Import of tea from Colombo stood at $ 4 million during the twelvemonth 2002-03. The FTA model understanding was signed by the two sides in 2002 during the visit of President General Pervez Musharraf to Sri Lanka. But it was yet to be finalized and implemented[ 7 ].


Tea is the cheapest and most popular drink that is served at both professional and societal assemblages all over the universe. In Pakistan it is counted as a basic nutrient point of common adult male and is an built-in portion of our civilization and heritage[ 8 ]. As described earlier that per capita ingestion of tea in Pakistan is non increasing and few sellers say that its growing is dead during past few old ages. Social and cultural factors are besides altering the form of industry.

Industry is besides under enormous menace from replacements ( java, softdrinks etc. ) , which will be discussed in ulterior subdivisions. Stagnation of tea industry can be seen by tonss of consumer publicities particularly by Lipton and debut of tea discrepancies like iced tea ( Lipton is about to present ) , green tea ( Lipton late introduced and Tapal already have it ) and flavored tea ( Dilmah ) .

Tea is non really much popular among teens, that is, population under 15 old ages. It is perceived as a ‘grand pappy ‘ drink by childs.

Population by selective age groups ( in per centum )

Less than 5 year

Less than 10 year

Less than 15 year













Beginning: Population Census Organization, Statistics Division, GoP.

43.4 % of state ‘s population is under 15 year. This is large ball of market non much wishing tea as a drink.


Technological promotions do non hold important impact on the industry as other external factors have. Advent of new machines for better blending and packaging have non affected industry in footings of ingestion forms, industry pie size, industry growing rate etc. All participants have made usage of new machines, like Dilatometers and Q. C. machines, for attractive packaging and digital graduated tables for quality blending. But coming of tea bags has truly changed the ingestion forms. Tea bags have given convenience, hygiene to consumers. In few sections, tea bags are more popular than soft battalions and sachets.


Tapal would hold to travel into the untapped countries of the market sharply because of the competition it is confronting. The untapped countries would include rural countries of Sindh and Punjab, Balochistan and NWFP as a whole.

After the WTO execution, foreign tea companies ( particularly from India ) can come in the market easy and that will increase the competition. So it should provide to safeguard against them.

Peoples are acquiring more wellness witting because of media enlargement. So now focal point has diverted towards ingestion of Green Tea. Thus Tapal should concentrate more on betterment schemes for it ‘s Jasmine Green Tea to run into the increased demand.

To aim more towards the younger section of the society, Tapal should concentrate more on Ice Tea as the tendency does non merely predominate in this section but besides in the other section of the society.

To profit from the WTO, it should be after towards its distinction scheme and for the resources so it could provide to the new universe of chances.

Industry Analysis

Menace of New Entrants

Major factors like strong client trueness, strong trade name penchants, impregnation of market and counter onslaught by bing houses are making high barriers for new entrant and favourable for bing houses.

Key participants due to their experience of the market and sheer size, enjoy the benefits of economic systems of graduated table bring their costs down and doing a competitory entry hard.

Capital is required for the puting up of processing workss as per the size of the house.

The trade names are good established and do the new entry in the market a existent challenge.

Rivalry among Existing Rivals

Major factors escalating the competition among rivals are ; addition in the figure of rivals and monetary value film editing. While other factors like client ‘s inability to exchange trade names easy, barriers to go forth the market and fixed cost are moderate.

After the entryway of Tetley the competition has increased. But still Tetley ‘s endurance is on interest.

Smuggled tea poses an intense competition in the industry.

Customer do n’t exchange trade name easy because of gustatory sensation trueness.

Dickering Power of Customers

Customer purchase tea in little measure and are big in figure hence have no bargaining power.

Consumers from the upper and in-between categories are non monetary value sensitive ensuing trade name trueness. On the manus lower category consumers are extremely monetary value sensitive and normally prefer loose tea because of its lower monetary value.

Dickering Power of Suppliers

There is a big figure of providers and new markets for tea providers are besides emerging because of which dickering power of providers has decreased.

Kenyan tea is the preferable type of tea in Pakistan doing it one the largest provider of tea and a major market for Kenyan tea.

Menace of Substitutes

Menace of replacement is high because competitory force per unit area from them is increasing enormously.

Although java is considered a replacement for tea but the ingestion of java in Pakistan is relatively lower than the ingestion of tea.

Cold drinks, though non a direct replacements, tends to be really popular with adolescents who are a market for tea ingestion.

Key external factors

We have summarized undermentioned chances and menaces which Tapal need to turn to:


Reducing input costs due to cheap imported tea from India & A ; Sri Lanka.

Puting up ain farms to cultivate tea in state to farther cut down inputs costs.

Finding new markets for export of packaged tea.

Introduction of iced/flavored tea for younger coevals.

Tea bags ingestion increasing due to convenience.

Target NWFP & A ; Balochistan ‘s Market, whish is being presently dominated by lose Tea.

Out-of-Home channel ( Institutional gross revenues ) incursion


Cheap tea from India and Sri Lanka bring oning new participants to come in the tea industry.

Addition in bootleg tea, which is sold as loose tea in the markets on cheaper rates.

Entry of juices and soft drinks of better gustatory sensation and quality.

Population under 20 old ages acquiring more attracted towards other drinks because of more inspirational advertisement and better cleavage.

Rise in International tea monetary values.



As described earlier that tea market is extremely competitory market, hence aggressive and originative advertisement is really of import to retain bing clients and pull new clients.

Presently, Lipton and Supreme are making aggressive advertisement and Tapal is establishing antagonistic runs.

Substitutes like Pepsi, juices are presently establishing aggressive advertisement runs and hammering whole tea industry.

Merchandise Quality:

Product quality is besides really of import success factor because bulk of branded tea consumers are hygiene witting and hence willing to pay a higher monetary value for it.

The freshness of tea should be long lasting, which is ensured by the quality packaging of the merchandise.

Consistency in gustatory sensation and olfactory property of the merchandise guarantees the client higher-up and sustained quality.

Convenient Packaging:

Tea is available in soft packages, sachets, plastic boxes, tea bags and difficult battalions as per demand, convenience and buying power of the client.

The tea packages are designed in a mode which besides focuses on convenience of retail merchants and jobbers.

Modern engineering has profoundly influenced packaging techniques and because of these inventions clients demands have been better satisfied.

Distribution Network:

The distribution web in Tea industry is really of import. After our analysis of the industry, we have seen that because of hapless range in rural countries by the viing companies, smuggled merchandises have established there foothold particularly in NWFP and Balochistan.

To maintain path of the lifting competition, both direct & A ; indirect, in the urban markets, the Tea companies have to continuously hunt for new markets and expand there distribution webs consequently.

As tea is a staple nutrient point, range in consumers arm length will ensue in addition in sale.

Wide spread distribution webs are besides of import, to acknowledge clients demands and have effectual feedback.

Fiscal Position:

Having strong fiscal place has besides become really of import in the current competitory market ;

Extended recognition period is demanded by the retail merchants and jobbers, which requires companies to keep higher working capital.

Second, the providers are to be paid through L/C, which requires instant payment to them.

Customer Loyalty:

In tea industry, consumers are gustatory sensation loyal. They do n’t exchange trade names easy unless they are non satisfied with current trade name or other trade name ‘s communications may be so strong that it induces them to seek the new trade name.

Major participants in branded market have established individualities and penchants of their trade names. They are in the tea concern for last many old ages.

Market portion:

Market portion is of import because it determines the clasp in the market.

If the market portion is big, the company can order its ain footings to its providers and retail merchants.

When the market portion is high, it helps safeguard the gross revenues publicity and selling budget for the company.



Quality Management


Integrated Production Process

International Exports

Strong Distribution Network in Sindh and Punjab

Brand Image

Highly Advanced

Customer Loyalty

Strong advertisement runs on local channels ( KTN etc. )


Weak out-of-home channel

Distribution comparatively weaker in NWFP & A ; Balochistan

Weak comparative fiscal place

Relative Technological Backwardness


Reducing input costs due to cheap imported tea from India & A ; Sri Lanka.

Puting up ain farms to cultivate tea in state to farther cut down inputs costs

Finding new markets for export of packaged tea.

Introduction of iced/flavored tea for younger coevals.

Tea bags ingestion increasing due to convenience.

Out-of-Home channel ( Institutional gross revenues ) incursion


Cheap tea from India and Sri Lanka bring oning new participants to come in the tea industry.

Addition in bootleg tea, which is sold as loose tea in the markets on cheaper rates.

Entry of juices and soft drinks of better gustatory sensation and quality.

Population under 20 old ages acquiring more attracted towards other drinks because of more inspirational advertisement and better cleavage.

Rise in International tea monetary values.

Achieving Differentiation-base Competitive advantage:

A company can utilize four attacks to accomplish a differentiation-based competitory advantage, which is discussed below:

Incorporate merchandise properties and user characteristics that lower the purchaser ‘s costs of utilizing the company ‘s merchandise.

Tapal has incorporated above attack in following ways:

They are non commanding premium monetary value for distinguishing their offerings, as most of the companies do. Tapal monetary values are lower than Lipton and higher so Supreme.

They are offering their trade names in different packaging like sachets and soft battalions to provide the diverse demands of mark clients. With lifting rising prices and diminishing buying power, sachets give consumers linear benefit.

Incorporate characteristics that raise the public presentation a purchaser get out of the merchandise.

Tapal has incorporated above attack in following ways:

Offering its tea in soft battalions.

Introduction of unit of ammunition and metal-free tea bags.

Sustained freshness and olfactory property in bundles.

Incorporate characteristics that enhance purchaser satisfaction in non-economic or intangible ways.

Tapal has incorporated above attack in following ways:

In their Ads of household mixture, they are picturing household love and bonding. It is a tea for whole household. Tagline “ mukammal ghar, mukammal chai ” provides a really good intangible value.

Tapal giving more value in lesser monetary value.

To Compete on the footing of capablenesss – to present value to clients via competitory capablenesss that challengers do n’t hold or ca n’t afford to fit.

Tapal has incorporated above attack in following ways:

Tapal is a household concern and they have focused their concern on tea merely, so they have better cognition of tea blending than its rivals. They have invented mixture of foliage and dust ( household mixture ) and Danedar, both are new in tea market. Unilever can non fit their capableness of fiting different blends & A ; introducing new types of tea. This capableness gives Tapal competitory border to present value to clients in ways challengers can non.

Distinguishing the Value Chain:

Differentiation in their value concatenation exists in Tapal in following ways:

They have differentiated merchandise R & A ; D activities, as described earlier. They have better merchandise designs and public presentation characteristics, which other rivals deficiencies.

They owns bulk of their distribution web. They do non hold third-party distribution system as Unilever have. That ‘s why they are able to take down costs in distribution and achieve faster bringing, more shelf infinite and greater handiness than its rivals.

They are making different advertisement runs. Positioning of their trade names is different from that of Lipton and Supreme. Merely similarity is in positioning of Tapal Mixture and Supreme.

They besides have differentiated fabrication and packaging activities. All their trade names have soft battalions presently. Merely tea bags are offered in soft carton. Whereas Lipton and Supreme have soft battalions, difficult battalions and plastic bags.


Tapal should go on their bing scheme of distinction and should besides integrate following recommendation to further beef up their scheme.

Tapal is unable to distinguish their buying and procurance activities. Tapal is following its buying activities which were followed by its laminitiss. Alternatively of buying tea through auctions, they should construct strong relationships with same providers and help them in keeping the quality and increasing the efficiencies.

High monetary value of tea due to better quality could be offset by conveying inventions and efficiencies in value concatenation.

As described earlier that younger coevals is non attracted towards tea as they are towards soft drinks. So Tapal should come up with new discrepancies of tea for this section.

They should non diverse their concern, that is, widening their current trade names to other merchandises. They should concentrate on tea concern merely. This manner they can prolong their competitory advantage. Harmonizing to Al Ries ‘s jurisprudence of contraction, company should concentrate their nucleus concern and do n’t seek to spread out to other classs.