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Yorkshire Tea - MGT382 - International Marketing

The Internationalisation of Yorkshire Tea
by

Charlie Hatcher

on 23 November 2012

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Transcript of Yorkshire Tea - MGT382 - International Marketing

Agenda We aim to create a successful international marketing strategy for Yorkshire Tea by: Introduction Brand of Taylors of Harrogate, which is a family run business, established in 1886 by Charles Taylor.

Joined forces with rival, Betty's Cafe tea rooms after WW2.

Yorkshire Tea is a small-medium sized enterprise (SME) in its own right

Main research efforts- USA, Turkey and Australia- most viable markets Yorkshire Tea's current performance: Introduction Readiness to go abroad SME competing against larger multinationals.

Strong financial position, with profits of £7.3m (WorkSmart, 2012).

Solid performance in domestic market - 11% market share (Mintel, 2012).

Unique brand image with a loyal customer base.
Previous experience and knowledge of, international markets (35 countries) (Yorkshire Tea 2012).

Culturally sensitive organisation.

Human capital in place for expansion.

High degree of 'globalism' in the tea industry (Hollensen, 2011). Business Portfolio Matrix High High Medium Medium Low Low Company’s compatibility
with the country Country’s Attractiveness Primary opportunities
Secondary opportunities
Tertiary opportunities KEY The
decision-making process Tea is the 6th most popular drink in the USA - 127 million Americans (Population of 300m) currently consume tea and this is growing.


However, 85% of American tea consumption is of iced tea (The Tea Association of the USA, 2012) and more Americans are drinking green tea.


Current product strategy and expected sales would not be enough to justify investment. The decision-making process Australia holds high synergy and low psychic distance with the UK.

A study by Brooke and Smith (2007) showed the psychic distance between operational facilities between them is stronger than that of the USA, India and Portugal.

However, operational problems rooted in low psychic distance can still occur (Brooke and Smith, 2007).

Unilever and Tetley are the main competitors in both UK and Australia.

Australia has two big supermarkets, which equal 80% of supermarket sales (Woolworths and Coles).

Australia is home to a large number of British expatriates who will be familiar with Yorkshire Tea - 93,000 people have migrated since 2001 (Expat Network, 2012) AUSTRALIA PEST
Open and stable political landscape.


World's 14th largest economy with growth average growth of 3.4% over last decade (UK Trade and Investment, 2012).
GDP Per Capita higher than the UK, at $40,800 USD (Central Intelligence Agency, 2011).
Favourable exchange rate.

Small psychic distance with shared language, cultural affinity and Commonwealth connection.
Population clustered in five major cities, four on East Coast.
High demand for and consumption of black tea- 75% of retail value in tea market (Euromonitor, 2011).

In 2009 there were 15.81 million internet users and broadcast media networks. Opens up various channels of communication with buyers and consumers, including social media. Segmentation Targeting Positioning Market Entry
Market timing
‘Late in’
High perceived quality

Entry methods
Joint venture: Costly entry method as profits would be split

Franchisor: Unnecessary concession of control

Distributors/agents: Doesn’t require too much investment/involvement from Yorkshire Tea. Relatively low risk although there is less control. The selection process is based on; "the most profitable segments that can be served the most effectively and efficiently by the company’s resources." (Pickton et. al., 2005, p 374).

•Geographic
- Four big cities on the east coast. Perth offers potential future opportunity.

•Demographic
- Aligning with current objectives, 16-25 market and the middle-aged women market.

•Psychographic
- To be consumed in the home with family/friends on regular occasion.

•Behavioral
- Characteristics towards particular goods or service categories (Kotler et al., 2006). Inelastic demand due to low price and presence as an everyday product allows regular purchase.
Strong brand mark, clearly visible by its packaging.

The brand has prospered through the trade name Taylors of Harrogate

Distinguishable packaging - quintessentially British

Specific strategy - Manufacturing own brand

Branding possibilities including, exploiting the strong cricket link between the UK and Australia.

Advantages of our strategy:

Increased sales by adapting to cultural preferences but still recongnizable.
Low manufacturing costs and quicker roll out process.
No language issues • Yorkshire Tea is prepared for further international expansion.

• After extensive analysis Australia has proven the most attractive market.

• Undifferentiated targeting strategy will be implemented. Primary segments are 16-25 and middle aged females.

• Will enter the market through exports via distributors and agents.

• Marketing mix will be carefully constructed to cater to local market conditions and provide effective support for the strategy.

• A strong brand image will also be maintained and leveraged, with subtle changes to localize the product and appeal to an Australian demographic.

• Following the proposed strategy should result in the capture of a share of the Australian tea market, which will not only yield financial benefits, economies of scale and economies of scope; but also provide a platform for future growth. Thank you for listening

All questions welcome Charlotte Turkey is the second largest tea market in the world with 90% of the population drinking tea at least once a day, 99% of which is black tea (Euromonitor International, 2004).


A wide variety of discounted brands and illegal imports, means that the sales prices are continuously low.


Not yet a member of the EU so product would need to be sold at a premium price due to increased export and distribution costs influenced by strict trade restrictions in the country (Matthew Davies, 2012).


Wealth of consumers still remains relatively low. Jamie Charles Victoria Joshua Stine Charles Hatcher
Charlotte Hicks
Jamie Arkle
Joshua Entwistle
Stine Winther
Victoria Hinde Group 1 Yorkshire Tea
MGT382
International Marketing Evaluating the current position of Yorkshire Tea in the marketing environment (PEST, SWOT, Porter's Five Forces)

Assessing market entry options (franchise, wholly owned subsidiary and distributors-agents)

Creating a marketing mix and branding strategy to secure a competitive advantage SWOT Marketing Mix - 4Ps Price Promotion Synergy between UK & Australia aids promotion

Promotional work made harder as it is organised from UK headquarters

Could simply increase teabag numbers in a box from 100 to 130 and label as 30% extra free

Important to play on British heritage as tea drinkers

British expatriates can be utilised for cost effective word-of-mouth advertising

Two-way communication on Twitter & Facebook a further option to engage consumers Product Core product will go unchanged.

The product/communication code will primarily focus on promotion adaptation (Hollensen, 2007).

Changes may be made to product attributes (price, size, country of origin and packaging).

Packaging adapted to the local Australian market (localisation).

Product extension strategies may be considered in the future; updates to packaging, or filling of the product line with more blends/flavours to appeal to other market segments. Place Intensive market coverage.

Product packed in the UK and transported via sea/air to Australia.

Taken by the intermediary or a freight forwarder then distributed to a variety of wholesalers/distributors and large retailers.

Primary downstream channel members will be large supermarkets (command 75% of sales).

Connect with smaller independent retailers and tea shops via wholesalers/distributors to maximise market coverage and support the promotional strategy.

Retailers used as a vehicle for further promotion and market development.

Responsibility of e-commerce distribution to the consumer left with the resellers. Porter's
Five Forces Conclusion Branding U
S
A T
U
R
K
E
Y P E S T Rivalry amongst
existing competitors Lipton currently holds 26% market share (International Business Times, 2010). Bargaining power of buyers Customers can compare brands online

Economic recession may force customers to choose cheaper alternatives Threat of new entrants •Both domestic and international companies could enter the market

•Small companies would lack the finance and scale to compete with Yorkshire tea, yet large multinationals could pose a threat Threat of substitutes Coffee sales are set to reach $800 million in 2013 (Epoch Times, 2010)

Iced and flavoured teas are also popular in Australia Bargaining power of suppliers Potential risk that tea farmers could vertically integrate and sell tea directly to supermarkets STRENGTHS WEAKNESSES OPPORTUNITIES THREATS Loyal expatriate market opportunity can be seized by promoting British image of Yorkshire Tea.

Localised markets on east coast offer more defined opportunities while product can be distributed in mass to these areas so transport costs are lowered further. Shipping overseas can involve high costs but the selling price of tea in Australia is much higher than in the UK.

Distribution channels outside supermarket networks are difficult to develop but Australia’s two largest supermarkets possess around 80% market share. Risk of marketing in Australia being too British oriented and not appealing to wider market – Yorkshire Tea have recently hired an International Brand Manager to deal with this.

Initial costs can be huge for new entrants which makes it hard to compete on price but Yorkshire Tea already export to around 35 countries worldwide so know how best to keep costs low during introductory stage. Control of operations is decentralised with key decisions made in the UK offices, it is important to keep focus on the threat of competition from Unilever, Australia’s leading tea brand.

Lipton tea sales have escalated since their decision to ‘go sustainable’ while Yorkshire Tea do not have the budget to match this but efforts should be made to promote sustainability. Weaknesses + Opportunities Threats + Weaknesses Threats + Opportunities Strengths + Opportunities Four main targeting strategies: undifferentiated, differentiated, concentrated and customised.

Tea appeals to all tea consumers - it represents an everyday product, therefore an undifferentiated targeting strategy is required when entering an international market.

Once established, a differentiated strategy could be applied.

Find a distributor within the four major east coast cities.

By distributing through major supermarket chains, our segments will be easily reached. Perceptual Map High Quality Low Price High Price Low Quality Tetley Lipton Viral Health
Foods Madura Dilmah Twinings Elmstock Tea Yorkshire Tea Chosen method - Distributors/agents Source: (Official Russia, 2009) References Brooke and Smith (2007). Psychic Distance in Global Operations Management. [ONLINE]. Available at:
http://www.poms.org/conferences/poms2007/cdprogram/topics/full_length_papers_files/007-0277.pdf [Accessed on 31 October 2012].
Central Intelligence Agency (2011) The World Factbook: Australia. [ONLINE] Available at:
https://www.cia.gov/library/publications/the-world-factbook/geos/as.html [Accessed 01 November 2012]
Euromonitor (2004). Who Drinks What: Identifying International Drinks Consumption Trends. 2nd edition. Pp. 109. [ONLINE] Available at: http://www.euromonitor.com/medialibrary/PDF/Book_WhoDrinksWhat.pdf [Accessed 06 November 2012]
Expat Network (2012). Living and working in Australia. [ONLINE] Available at:
http://www.expatnetwork.com/Jobs/Working-and-Living-Overseas/Living-In-Australia.cfm [Accessed on 30 October 2012]
Hollensen S. (2007) Global Marketing, Pearson Education Limited.
International Business Times (2010) Lipton sales up after going green. August 6th 2010. [ONLINE]
Available at: http://au.ibtimes.com/articles/41317/20100806/lipton-sales-up-after-going-green.htm [Accessed on 10 October 2012].
Kotler, Philip & Keller, Kevin L. (2006): Marketing Management, 12th edition, Pearson Education Limited
Matthew Davies. (2012) Yorkshire Tea’s current internationalisation status and strategy. [Interview] 17th October 2012.
Mintel. (2012). Tea and Other Hot Drinks. [ONLINE]
Available at: http://academic.mintel.com.eresources.shef.ac.uk/display/590027/?highlight=true. [Accessed on 29 October 2012].
Official Russia (2009) Market and Industry Report: Russian Tea market research report. 29 September 2009. [ONLINE]
Available at: http://officialrussia.com/?p=9217. [Accessed on 04 October 2012].
Pickton, David & Boderick, Amanda (2005): Integrated Marketing Communications, 2nd edition, Pearson Education Limited
The Epoch Times (2010) Strong coffee sales, tea much weaker. Danny Rose. March 5th 2010. [ONLINE]
Available at: http://www.theepochtimes.com/n2/australia/tea-coffee-sales-30835.html [Accessed on 17 October 2012].
The Tea Association of the USA. 2011. Tea Fact Sheet. [ONLINE] Available at: http://teausa.org/index.cfm/14655/tea-fact-sheet.
[Accessed 22 November 12]
UK Trade and Investment (2012) Austalia. [ONLINE]
Available at: http://www.ukti.gov.uk/export/countries/oceania/australianewzealand/australia.html [Accessed 01 November 2012]
Work Smart. (2012). Bettys & Taylors Of Harrogate Ltd. [ONLINE]
Available at: http://www.worksmart.org.uk/company/company.php?id=00543821#Company_details. [Accessed on 29 October 2012].
Yorkshire Tea. 2012. Yorkshire Tea Bags. [ONLINE] Available at: http://www.yorkshiretea.co.uk/. [Accessed 22 November 2012].
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