Business Strategy of Unilever (Lipton)

Final Project
Course: Business Strategy & Policy

Learning Objectives
 Introduction
 History of Lipton (Unilever)
 Vision, Mission, Strategies,
Objectives
 Analysis
 Matching Stage
 EFE Matrix
 IFE Matrix
 SWOT Matrix
 BCG Matrix
 Advantages/Disadvantages of
alternative Strategies
 Recommended Strategies & Long
term objectives
 Recommended Annual objectives
& Polices
 Strategy Review & Evaluation
 Conclusion

Unilever’s Vision
Existing
To create a better future every
day. We help people feel good,
look good and get more out of
life with brands and services
that are good for them and
good for others
New
To be the paramount across
the whole globe to become
the part of each and every
moment of life by bringing
sustainability in growth,
novelty in products and
services; from food, beverages
to home & personal care.

Unilever’s Mission
Existing
To meet the everyday needs of
all consumers everywhere for
nutrition hygiene and personal
care through branded products
and services that delivers the
best quality and value.
New
To provide a better future to our
planet by working on social
responsibility and protecting our
environment in our every
segment ranging from food,
beverages to home and personal
care products and services.

History of Lipton Tea
 Established in 1893 as Thomas J Lipton Co
 Acquired by Unilever in the year 1972.
 Launched in Pakistan in 1948
 Leading tea brand in the world
 More than 11 major varieties of Lipton in Pakistan

PRODUC
T
• Lipton Yellow
label
• Lipton mega
danne
• Lipton green
tea
• Lipton
flavored tea
• Lipton iced
tea
• Lipton tea
bags
PRICE
• PREMIUM
PRICING
STRATEGY: to
encourage
favorable
perceptions
among buyers
• VALUE BASED
PRICING
STRATEGY:
value for the
customer and
not production
cost
PLACE
• All across
Pakistan
• Urban/Rural
Areas
• e.g. HKB,
Hyperstar,
small retail
stores
PROMOTI
ON
• Advertisemen
t (TV,
Newspaper,
Magazines,
Billboards, POS
etc)
• Sales
Promotions
(Lucky draws,
discounts)
• Internet
Marketing
• Sponsorships
• Co-Branding
4Ps

PRODUCTS
GEOGRAPHICA
L
BEHAVIORA
L
PSYCHOGR
APHIC
DEMOGRA
PHIC
Yellow Label All major cities
Active
enthusiasts
A+, A/B+, B
15 years &
above
M/F
Green tea All major cities
Health
conscious
A+, A
20 to 40
years
M/F
Iced tea -----
Cool Kids
Youngsters
A+, A
10 to 32
years
M/F
Flavored tea All major cities Flavor cravers A+, A/B+
10 to 32
years
M/F
Tea bags All major cities
Non-Burger
lovers
A+, A
15 years &
above
M/F
Legends:
A+ UPPER CLASS
A UPPER –MIDDLE CLASS
B+ MIDDLE CLASS
B MIDDLE-LOWER CLASS
Segmentation

Rivalry
(High)
Power of
Suppliers
(High)
Threat of
Substitutes
(High)
Power of
Buyers
(Moderate)
Barriers to
entry
(High)
Porter Analysis

LIPTON TAPAL Brook Bond
PSYCHO-
ANALYSIS
Health caring
Adventurous
Active
Young
Vibrant
Energetic
Focuses on aroma
and taste
Establishes strong
family bonds
Rich taste and flavor
Unique aroma
Good packaging
Good advertising
Brand visibility
TARGET
MARKET
All age group except
children
Upper and middle
social class
Urban Areas
children
All social classes
Urban as well as rural
area people
children
Also rural area
people
All social classes
Urban as well as rural
area people
MARKET
POSITIONIN
G
High quality
Premium price
Strong Aroma
Excellent taste
Adventurous
1-1 competitor of
Lipton
Strong aroma and
Unique aroma
Good packaging
Good advertising
Competitor Analysis

LIPTON TAPAL Brook Bond
PRICE
High priced focusing
on middle and elite
class
Medium Price Medium Price
STRATEGIE
S
Market development
Product Development
Cost leadership
Economies of scale
Low cost strategy
Product development
Market development
Forward integration
strategy
RND
STRATEGY
Differentiation
Innovation
Innovation
They have less focus
on RND as compared
to the other two
SNOW AND
MILES
TYPOLOGI
ES
Prospector
As it is innovative,
growth oriented,
searches for new
markets and new
growth opportunities,
Analyzer
Tapal maintains its
current markets and
current customer
satisfaction with
Defender
Brooke bond protects
current markets and
maintains even
Competitor Analysis

43%
41%
8%
6% 2%
Sales
Lipton
Tapal
Vital Tea
Tetley
Others
Market Share

T H R E AT S
High prices
Smuggling of
loose tea
Substitutes
Rise in
International tea
prices
Tapal’s indh &
Baluchistan Market
share
O P P O R T U N I T I E S
Reducing
costs
Producing
Out of Home
Advertisement
Signing contracts with
Commercial sectors
Reduction in Import
duty
W E A K N E S S E S
High prices Distribution Network Out-of-Home (OOH) Advertising
S T R E N G T H S
Quality
Management
Brand
Recognition
Brand
Image
Financial
Position
Customer
Loyalty
Quality and
Variety
Distribution
and
Advertising

Key External Factors Weight Rating
Weighte
d Score
Opportunities
1
Reducing costs: Instead of importing from other countries, it is
preferable to import from India and Srilanka at cheaper cost
0.08 4 0.32
2
Producing: Set up farms for cultivation instead of importing,
which further reduces input costs
0.11 2 0.22
3
Out of Home advertisement can be used to enhance sales in Sindh
and Baluchistan
0.09 1 0.09
4
Have opportunity to sign contracts with commercial sector i.e.
universities, restaurants ,offices etc.
0.09 3 0.27
5
reduction in tariff and custom( import duty reduced from 10% to
5%, sales tax 17% to 6%) in the recent of 2015 gives great
opportunity of increasing sales
0.14 4 0.56
Total Weight 0.51
Threats
6
Threats of New Entrants: Due to cheaper tea imports from Sri
Lanka and India, new players are likely to enter the industry.
0.09 4 0.36
7 Smuggling: Increased smuggling of loose tea at cheaper rates. 0.08 3 0.24
8 Substitutes: Better quality and taste of juices and soft drinks 0.08 4 0.32
9
Rise in International tea prices: Due to popularity tea prices have
been increased internationally.
0.05 3 0.15
10 People thinking is changing about tea usage 0.07 4 0.28
11
High Market share of Loose tea and Tapal in Sindh and
Baluchistan
0.06 1 0.06
12 Long summer season affect the sale of tea 0.06 3 0.18
Total Weight 0.49
Total Weight of Opportunities and Threats 1 3.05

Key Internal Factors Weight Rating Weighted Score
Strengths
1
Experience and Quality Management: Excels its commitment to matching the quality of Lipton
tea with excellent manufacturing practice.
0.1 4 0.4
2
Brand Recognition: Lipton is a strong brand name, has strong dominance in the market and
maximum shareholding overall and 54% market share
0.08 4 0.32
3
Customer Preferences: Lipton focuses on its target audience, keeping in mind the taste and
preference of market segment.
0.09 3 0.27
4
Financial Position: Lipton has gained great profit throughout its run and still continues to do so
through International exports.
0.1 3 0.3
5
Customer Loyalty: Most loyal customers of Lipton prefer using Yellow Label because it has a
sense of trust and commitment in terms of taste.
0.1 3 0.3
Advertisement : It has strong advertising campaigns focusing on health and inspiration 0.04 4 0.16
6 Diversification: It has an integrated production process and is highly innovative. 0.07 3 0.21
7
Distribution : It has a strong distribution network in Punjab with respect to others provinces of
Pakistan
0.09 4 0.36
8 Packaging: Attractive packaging as well as gifts i.e. Lipton printed caps, cups, shirts etc. 0.05 3 0.15
9 Out-of- Home (OOH) Advertising 0.05 2 0.1
10 It has a strong advertising campaigns focusing on health and inspiration 0.04 3 0.12
Total Weight 0.81
Weaknesses
10
High prices: Since it is a market leader and offers a premium brand, it sets the price in the market
and charges high price.
0.04 2 0.08
11 Some products like Green tea and flavored tea needs more promotional campaigns. 0.05 3 0.15
12
Distribution: Distribution network is relatively weaker in NWFP,Sindh and Baluchistan as
consumers there still prefer local teas over branded ones.
0.1 1 0.1
Total Weight 0.19

Strengths
1. Experience and Quality Management:
Excels its commitment to matching the
quality of Lipton tea with excellent
manufacturing practice.
2. Brand Recognition: Lipton is a strong
brand name, has strong dominance in the
market and maximum shareholding
overall and 54% market share
3. Customer Preferences: Lipton focuses
on its target audience, keeping in mind
the taste and preference of market
segmentation
4. Financial Position: Lipton has gained
great profit throughout its run and still
continues to do so through International
exports.
5. Customer Loyalty: Most loyal
customers of Lipton prefer using Yellow
Label because it has a sense of trust and
commitment in terms of taste.
6. Diversification: It has an integrated
production process and is highly
innovative.
7. Distribution: It has a strong
distribution network in Punjab with
respect to others provinces of Pakistan
8. Packaging: Attractive packaging as
well as gifts i.e. Lipton printed caps,
cups, shirts etc.
9. Out-of- Home (OOH) Advertising
10. It has a strong advertising campaigns
focusing on health and inspiration
Opportunities
1. Reducing costs: Instead of importing
from other countries, it is preferable to
import from India and Srilanka at
cheaper cost
1. Producing: Set up farms for cultivation
instead of importing, which further
reduces input costs
1. Out of Home advertisement can be used
to enhance sales in Sindh and
Baluchistan
1. Have opportunity to sign contracts with
commercial sector i.e. universities,
restaurants, offices etc.
1. Reduction in tariffs and custom (import
duty reduced from 10% to 5%, sales tax
17% to 6%) in the recent of 2015 gives
great opportunity of increasing sales.
SO
(S4-O1)
Financial position can be increased by
importing raw material at low cost
from India and Srilanka
(S7-O4)
Lipton has strong distribution network
and advertisement through which it
can expand Sindh and Baluchistan
market
(S7-06)
By increasing the distribution
network, multiple restaurants,
universities and commercial sector to
gain further market share.
(S10-O4)
Lipton has strong advertisement
network through which it can expand
Sindh and Baluchistan market
(Strength-Opportunities)

(Weakness-Opportunities)
Weaknesses
1. High prices: Since it is a market leader
and offers a premium brand, it sets the
price in the market and charges high
price.
1. High prices: Since it is a market leader
and offers a premium brand, it sets the
price in the market and charges high
price.
1. Distribution: Distribution network is
relatively weaker in NWFP, Sindh and
Baluchistan as consumers there still
prefer local tea over branded ones.
Opportunities
1. Reducing costs: Instead of importing from
other countries, it is preferable to import
from India and Srilanka at cheaper cost
1. Producing: Set up farms for cultivation
instead of importing, which further
reduces input costs
1. Out of Home advertisement can be used to
enhance sales in Sindh and Baluchistan
1. Have opportunity to sign contracts with
commercial sector i.e. universities,
restaurants, offices etc.
1. Reduction in tariffs and custom (import
duty reduced from 10% to 5%, sales tax
17% to 6%) in the recent of 2015 gives
WO
(W2-04)
Lipton’s distribution network is weaker in
some of the provinces by improving their
distribution networks it can expand market
share in NWFP, Sindh and Baluchistan.
(W1-O2)
Lipton can gain more profit margins by
starting in home production as in Pakistan
some farmers started their own cultivation
of tea.
(W2-O4)
Green tea is highly demanded in these days
and by doing out of home advertisement it
can gain more market share from this
segment.

(Strengths-Threats)
1. Experience and Quality Management:
Excels its commitment to matching the
quality of Lipton tea with excellent
manufacturing practice.
2. Brand Recognition: Lipton is a strong
brand name, has strong dominance in the
market and maximum shareholding overall
and 54% market share
3. Customer Preferences: Lipton focuses on
its target audience, keeping in mind the taste
and preference of market segmentation
4. Financial Position: Lipton has gained
great profit throughout its run and still
continues to do so through International
exports.
5. Customer Loyalty: Most loyal customers
of Lipton prefer using Yellow Label because
it has a sense of trust and commitment in
terms of taste.
6. Diversification: It has an integrated
production process and is highly innovative.
7. Distribution: It has a strong distribution
network in Punjab with respect to others
provinces of Pakistan
8. Packaging: Attractive packaging as well
as gifts i.e. Lipton printed caps, cups, shirts
etc.
9. Out-of- Home (OOH) Advertising
10. It has a strong advertising campaigns
focusing on health and inspiration
Strengths Threats
1. Threats of New Entrants: Due to cheaper
tea imports from Sri Lanka and India, new
players are likely to enter the industry.
2. Smuggling: Increased smuggling of loose
tea at cheaper rates.
3. Substitutes: Better quality and taste of
juices and soft drinks
4. Rise in International tea prices: Due to
popularity tea prices have been increased
internationally.
5. People thinking is changing about tea
usage
6. High Market share of loose tea and Tapal
in Sindh and Baluchistan
7. Long summer season affect the sale of tea
ST
S1-T1
Lipton caters this threat by maintaining
strong brand name , image and brand loyalty
S6-T3
With its diverse product lines, it can
overcome this threat by offering iced tea and
flavor tea.
S10-T5
Although people preferences about tea are
changing but Lipton is working in its Ads to
change consumer psychology
(S7-T6-T7)
By creating strong distribution network,
Lipton can capture market share of Tapal
and loose tea

(Weaknesses-Threats)
Weaknesses
1. High prices: Since it is a market leader and
offers a premium brand, it sets the price in
the market and charges high price.
1. Some products like Green tea and flavored
tea needs more promotional campaigns.
WT
(W2-T3), (W2-T6)
By overcoming the promotional weaknesses of
flavored tea Lipton can compete with its
substitutes
(W1-T1)
By slightly reducing their tea prices or providing
good offers threat of new players in the market
can be minimized that might influence their
market share.
1. Distribution: Distribution network is
relatively weaker in NWFP, Sindh and
Baluchistan as consumers there still prefer
local teas over branded ones.
Threats
1. Threats of New Entrants: Due to cheaper tea
imports from Sri Lanka and India, new players
are likely to enter the industry.
2. Smuggling: Increased smuggling of loose tea
at cheaper rates.
3. Substitutes: Better quality and taste of juices
and soft drinks
4. Rise in International tea prices: Due to
popularity tea prices have been increased
internationally.
5. People thinking is changing about tea usage
6. High Market share of loose tea and Tapal in
Sindh and Baluchistan
7. Long summer season affect the sale of tea

Advantages
 Farmers started cultivation
of tea in their farms in
Pakistan. This will safe cost of
imports
 Large demand can be met
Disadvantages
 Required High investment
in farming plants
 Quality factor can be
affected
Strategy : (In Home Production Strategy)
Advantages & Disadvantages of Alternative Strategies

Market Development Strategy for Flavored & iced tea:
Advantages
 Increase in sales in summer
 Increase the usage of Iced Tea
Disadvantages
 Increase Advertisement Cost
 Increase Distribution Cost
Marketing Penetration strategy (other than Punjab):
Advantages
 Get market share in other
provinces too.
 Cobranding with sugar, milk
and biscuits will increase its
sale
Disadvantages
 Increase Cost of Promotion
StrategiesStrategies

Iced Tea Join venture with PepsiCo:
Advantages
 Lipton can use Pepsi
Distributors
Disadvantages
 Collaboration between the
department can be affected
due to conflicts
Strategies
Market Penetration of Tea Dust against Tapal:
Advantages
 Capture market of strong
tea users
Disadvantages
 Lipton yellow label usage
can be affected

Product Development of Lipton Darjeeling:
Advantages
 Can capture the market of
Baluchistan
Disadvantages
 No as such
Strategies
Lipton Mixture Tea:
Advantages:
 Lipton mix tea can give an advantage over other
competitors.

Recommended Long Term Objectives:
 Capture tea market of Sindh( Market Penetration)
 Own Tea Production Plant in Pakistan( Backward integration)
 Change consumer preferences about tea
 Lipton Iced tea revival (Joint venture with PepsiCo.)
 Signing MOU’s with as much commercial sector, restaurants
and universities.
Recommended Strategies:
 Improve distribution of tea in Sindh
 Improve advertisement & promotional campaigns according
to the need of Sindh consumers
 Increase sales of Lipton Iced tea
 Increase sales of Green tea
 Co-branding: with milk and candy biscuit, free sugar etc.
Recommended Strategies & Long Term Objectives

 Intense distribution
 Different promotion strategies to cater different markets.
 Lipton yellow label should reduce its prices in order to
become a more affordable brand
 Lipton yellow label should increase the use of tea vending
machines to all the major cities in Pakistan.
 Lipton should introduce its internationally recognized ice tea
in Pakistan first on an experimental basis
Annual Objectives

Actual Strategies Recommended Strategies
Not working on new product
with Tapal
Working on new strong Lipton
brand in Pakistan
Minimum advertisement &
sales for Lipton Iced Tea
Enhance advertisement & sales
of Lipton Iced Tea
Minimum advertisement for
Lipton Green Tea
Enhance advertisement of
Lipton Green Tea
Minimum distribution of
Lipton Green Tea
Increase distribution of Lipton
Green Tea
Comparison of Recommendations to Actual
Strategies

Strategies Cost (Rs) Annual Objectives Cost (Rs)
Distribution of tea in
Sindh
10 Million Own Tea production in Pakistan 20 Million
Advertisement &
promotional
campaigns
2.5 Million Capture Tea market of Sindh 7 Million
Contract with Retailers
in Sindh
7 Million Joint venture with PepsiCo 15 Million
Contract with
Distributor in Sindh
5 Million
Signing MOU’s with restaurants
& Universities
14 Million
Co-branding with milk
& candy biscuit etc.
6 Million
Change consumer preference
about tea in Sindh, NWFP and
Baluchistan
12 Million
Cost of Specific Strategies and Annual objectives

Cost of Farming
Initial Four Year Investment per
Acre
Rs.170,000/-
Production Per Acre 1200 kg
Area of Cultivation Mansahra and Swat
Cost of fertilizers Rs.12000/-
Cost of weeding 3210
Cost of tipping 1575
Overhead Cost 5000
Total Cost Rs.200,000/acre/ann
um
Total Sales: 60 Million per annum
Other Costs:
Lipton Mixture Tea
Products 60 Grams 120 Grams Sachets
Production 25% 25% 50%
Kg 200,000 50,000 50,000

Recommended Strategies Implementation Expected Results
Improve distribution of tea
in Sindh
Signing contracts with
as many distributors as
possible
Market share will be
captured in Sindh
market
Improve advertisement &
promotional campaigns for
Sindh consumers
Sponsorships, TV ads &
bill board
advertisements.
It helps to increase
sales in Sindh
Increase sales of Lipton Iced
tea
Door to door sales &
point of sales in stores
Overcome substitute
Increase sales of Green tea Promotional campaigns
for creating awareness
of green tea
Increase in awareness
of green tea in overall
market
Co-branding: with milk and
candy biscuit, free sugar
etc.
New packaging design
and offerings
Usage rate will be
increased
Implementation & Expected results for recommended strategies

Desired Situation:
 50 % market share Lipton share of Pakistan by
launching new “Lipton Mixture Tea” according to the
strong taste required of consumers in competition of
Tapal
Current Situation:
 85% of Upper and Middle Class is captured by Lipton.
 Lipton has high share in Punjab.
 Lipton Tea Advertisement is lacking attraction
 95% of Lower Middle and Lower Class is captured by
Tapal. Tapal has high share in Sindh % Baluchistan
 Tapal is successfully attracting the market with its TVC

Company Strategy
 To double the size of the business whilst reducing
environmental footprint and increasing positive social impact
 Unilever aims to expand its business more by doubling its
sales.
Supporting Policies
 Increase distribution and advertisement
 Launch new Lipton Mixture brands
 Bring prices of products close to the competitors
 Support cultural activities in the country
Recommended Polices

Divisional Objective
 Lipton market penetration in Sindh and Baluchistan
 Increasing rare and expensive raw material
 Collaboration with our employees
Supporting Policies:
 Strong relationship with distributors and retailers.
 Training to farmers about tea plantation
 Financial support to the farmers
Con’t

Production Department Objective
 Most consolidated packaging and less wastage
Supporting Policies:
 Less water usage
 Reduction in Greenhouse Gases
Con’t

 Inspect the core bases of a firm’s strategy
 Contrast between the expected and the actual results
 Take corrective actions if required
Strategy Review & Evaluation

Conclusion
 Pakistani tea industry is concentrated with Lipton
 Further growth and development
 Establishment of stronger brands through their
innovative and superior products

Business Strategy of Unilever (Lipton)

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